The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to publicly commit by mid-November to passing a Fiscal Responsibility Act, amid “increasing push back” over fears it will renege on its side of the Value-Added Tax (VAT) bargain.

Robert Myers, the Coalition for Responsible Taxation’s co-chairman, told Tribune Business that he, too, was also getting “anxious” about the Christie administration’s failure to-date to sign up to wider fiscal reform.

He warned that the fiscal debate would likely become “hotter” by mid-November without a public statement from the Government committing it to spending and other reforms.

Explaining that he was “trying to manage” the “fears” of Coalition members as best he could, Mr Myers also confirmed that the private sector would likely run out of funding for its share of the VAT education campaign by month’s end.

Tribune Business has obtained an October 6, 2014, letter sent to Prime Minister Perry Christie, in which Mr Myers - on the Coalition’s behalf - seeks a meeting with himself and two key Cabinet ministers on three key issues.

Apart from determining

“the way forward” on a Bahamian Fiscal Responsibility Act, the Coalition also wants to discuss energy reform “and decisions being made”.

The final proposed agenda item for the meeting, at which the Coalition wants Michael Halkitis, minister of state for finance, and Khaalis Rolle, minister of state for investments, to be present, is the long-standing proposal for the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) to take over as the Registrar of Businesses from the Government.

And an accompanying e-mail from Mr Myers lays bare the private sector’s concerns that Bahamian fiscal reform will be ‘all take and no give’, with the Government successfully implementing its VAT and addressing none of the issues it has raised.

“We have submitted a letter formally requesting a meeting with the Prime Minister, and prior to this multiple verbal requests went out,” Mr Myers wrote.

“We hope that the PM and others will respond positively to this request, but there is growing concern from a larger number of members, and Chamber members, that the critically important matter of Fiscal Responsibility action may be ignored by the Government, as was always the fear.

“We would suggest that each of your associations do what is required to ensure the Government hears our message, and request for meeting and action on this matter.”

Mr Myers then addressed the financing for the private sector’s share of the VAT education campaign, adding: “We have exhausted all funds for public education past October, and will need to have a meeting very soon to decide our next course of action.

“We will wait another week to see if a response [from the Government] arrives, and will then call a meeting towards the end of October.”

Contacted by Tribune Business, after this newspaper received an increasing volume of calls from the business community expressing concern that the Government will duck making any firm commitment to wide-ranging fiscal reform, Mr Myers confirmed he shared these concerns.

“That’s definitely a sentiment that’s around,” he said. “I’m trying to manage that as best I can. We’re all concerned. A lot of people are very concerned, and I’m trying to keep all that moving in the right direction.”

Mr Myers said that while some revenue-side reforms were inevitable, given the scale of the Bahamas’ $5.8 billion national debt and $440 million-plus annual deficits, the Government had to address the wider concerns of society.

The Coalition has consistently made the case for the Bahamas to follow New Zealand’s lead in passing a Fiscal Responsibility Act, arguing that it will help prevent the country falling into a similar situation in the future.

Such an Act would set annual spending limits for the Government, and require that it produce a ‘balanced Budget’ that involves no deficit spending. It would also mandate the Government to come back to Parliament for extra funds, and permission to breach previous limits, in emergencies such as hurricanes.

Yet, to-date, the Christie administration has studiously avoided getting into a debate about statutory controls, or ‘checks and balances’ on its spending, let alone a Fiscal Responsibility Act.

The Prime Minister publicly rejected a proposal by the Government’s own US consultants for the Bahamas to establish a ‘Fiscal Rule’, all of which has led many to conclude it is only fixated on getting more money via VAT.

And some in the Coalition are known to believe that the private sector gave up the leverage it had over the Government by consenting to VAT before gaining any commitment to wider reform.

Acknowledging “the push back I’m getting from the members”, Mr Myers expressed optimism - based on previous meetings with the Prime Minister - that the Government would deliver on wider fiscal reform.

Pledging that the Coalition would not let a Fiscal Responsibility Act “fall off the radar”, Mr Myers told Tribune Business: “I’m hoping it’s a case of getting the meeting set up and moving forward.

“I know people are getting anxious, as am I, but we have to keep pressing and moving forward.”

Urging the Government to ease the tension by publicly committing to such legislation, the Coalition co-chair said: “It’s important some comments are made prior to November, and I certainly encourage the Government to do that, with regard to fiscal responsibility and the like.

“That sort of thing would show that the Government is being responsible overall, and not adding taxation without addressing fiscal concerns.”

Without such a public statement, Mr Myers warned that “it’ll probably become a hotter topic” by mid-November.

“If some comment, progress is not made with regard to a Fiscal Responsibility Act, the debate will start getting more heated,” he explained.

Mr Myers suggested the Government seemed to be relying on the Coalition to keep such thoughts and pressures in check, but there were limits to what he could do.

“If our request is not met, we’ll have to say: ‘Sorry, we’ve done the best we can. Over to you private sector and public’,” he said, implying that public pressure might be needed to force the Government’s hand.

While VAT was needed “whether we like it or not”, the Coalition co-chair added: “This thing is being super-rushed, so everyone is on heightened sensitivities....... Because of the timing, it’s all very frantic.”

And he confirmed the private sector would need extra funding to continue its half of the VAT education campaign.

“If the Government isn’t going to act accordingly, we’re going to have to raise some funds to keep the public education campaign going,” Mr Myers told Tribune Business.