The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian businesses were yesterday said to be “waiting with bated breath” for the Government to unveil details on its proposed National Health Insurance (NHI) plan, after the Prime Minister said May’s Budget would be “a major milestone” in the scheme’s development.

In remarks that are likely to further alarm many in the Bahamian private sector, who are already grappling with Value-Added Tax (VAT) and potential minimum wage and redundancy pay reforms, Mr Christie said the 2015-2016 Budget would “lay the foundation” for NHI’s planned implementation in 2016.

“I believe that NHI will provide tremendous benefits to our citizens, and set the platform for our place as one of the best small countries in the world,” the Prime Minister said.

Many businesses are fretting over the further cost burden NHI is likely to impose. While no firm details have been released, the main questions are how it will be financed, who will pay and how much?

The scheme, based on its previous incarnation, is likely to be funded by increased National Insurance Board (NIB) contributions - meaning it will reduce both employee take-home pay and business bottom lines.

Gowon Bowe, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, said NHI’s impact on the private sector had to be assessed alongside the effects of VAT and other previous tax increases, plus other cost factors.

This, he added, was key to avoid “a shock to the system” and any “unintended consequences” from NHI implementation.

The BCCEC is represented on the NHI committee, but Mr Bowe told Tribune Business yesterday: “The business community is waiting with bated breath, because eventually with all the increases in the cost of doing business, that comes down to the profitability of the business.”

He warned that NHI, together with all the other tax and cost increases, could place some companies in a position where they are “not viable and can’t sustain themselves to the point where they are growing the economic pie and contributing to the Government from a tax perspective”.

“This needs to be done from a holistic approach, as you can’t look at each item separately,” Mr Bowe warned. “You can’t be discussing the minimum wage, VAT and Business Licences individually.

“You have to look at each of those collectively, and how they can be addressed - each one - without a shock to the system that has unintended consequences for the business community.

“You don’t want to see any major changes take place that become impossible to adjust to.”

Mr Bowe called for the Government to implement reforms gradually in a phased approach, rather than as it was doing now, heaping minimum wage/redundancy reforms on the private sector, to be followed by NHI, straight after a VAT that businesses were still adjusting to.

Such moves, he added, were counter-productive to the Government’s - and country’s - main goals of growing the economy, reducing unemployment and increasing tax revenues.

Mr Bowe said that while there were “some positive signs”, and the Prime Minister had acknowledged the business community’s concerns, “what remains to be seen is the follow through and the Government taking meaningful steps to address this”.

“It’s going to be a give and take relationship,” he added, “between the Government and private sector. What’s important is that give and take is a two-way street, not one always take from the other. As long as we have an equitable distribution of give and take, we will be well placed to have a robust economy in the not too-distant future.”

However, Rick Lowe, a senior executive with the Nassau Institute think-tank, was far more pessimistic over NHI and its potential economic impact.

“They must have a magic wand somewhere,” he told Tribune Business of the Government. “That’s the only thing I can suggest. I think it will further push the Government down the road of bankruptcy.

“These things [NHI] are just unsustainable. Every country in the world you can name is having to retool their healthcare, their socialist medicine, because they can’t sustain it.”

Mr Lowe accused the Government, and politicians generally, of employing “political pandering” and failing to level with the Bahamian people over “how bad things are” and what was realistically achievable.

“If you keep hand-cuffing the business community and they’re not allowed to able to grow, how do you expect to get economic growth and jobs to be created,” he asked Tribune Business. “It’s a real dilemma.”