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Govt Urged To Cut ‘30% Inefficiency’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading governance reformer yesterday urged the Government to tackle “30 per cent inefficiency” levels within the public sector, arguing that this and its crackdown on tax cheats were key to reaching a Budget surplus.

Robert Myers, a principal with the Organisation for Responsible Governance (ORG), told Tribune Business that all legitimate, tax compliant businesses “should be applauding” the Government’s success to-date in getting non-payers to contribute their fair share.

Simon Wilson, the Ministry of Finance’s financial secretary, last week revealed that the Government’s tax enforcement drive, launched last November, was yielding an extra $15 million per month on New Providence alone.

The Government’s top finance official disclosed that it is targeting an extra $400 million in annual revenues within two years from its compliance efforts alone, an initiative that yesterday met with Mr Myers’ approval.

However, the former Bahamas Chamber of Commerce and Employers Confederation (BCCEC) chairman warned the Government not to solely focus on “beating up” the private sector in its quest to eliminate the persistent fiscal deficits.

Mr Myers emphasised that greater accountability was essential when it came to spending, and urged the Government to tackle what he described as the “25-30 per cent inefficiency” level in the public sector.

He also noted the support given by Jarkko Turunen, the International Monetary Fund’s (IMF) Bahamas mission chief, for the implementation of a Fiscal Responsibility Act and ‘fiscal rules’ to ultimately make the Government’s spending more transparent and accountable.

Mr Myers said both initiatives “need to happen”, given that successive PLP and FNM administrations had shown an inability to curb the spending that is driving continued $300 million deficits despite the extra $1 billion-plus in VAT revenues.

Still, the ORG principal said Mr Wilson and the Department of Inland Revenue were to be commended for doing their job in cracking down on tax-dodging businesses.

“That’s fantastic news. I’m so excited to hear that,” Mr Myers told Tribune Business of the extra $15 million per month in revenue yield. “They’re doing their job, and that’s what we need. All good, honest businessman in the private sector should be applauding this.”

Mr Wilson had last week revealed that courier companies were “stealing” from the Public Treasury, with three having recently agreed to pay a collective $7 million in outstanding taxes following audits of their businesses.

Further examples cited by the financial secretary included a Bain Town liquor store, which was paying Business License fees on a $50,000 annual turnover despite ordering $8 million worth of product from suppliers, and a company that had agreed to pay $800,000 in due Customs duties following a post-clearance audit.

Mr Myers also backed the Government’s seeming equitable enforcement of the law, based on Mr Wilson’s comments about the complaints he had received from current and former senior civil servants when they were hit with demands for real property tax payments.

“It’s one law or no law. Nobody’s exempt,” he told Tribune Business. “What’s good for the goose is good for the gander, whether it’s the Prime Minister or a senior civil servant. What’s good for the public is good for them, too.”

Mr Myers, though, said the Government could not expect to eliminate the annual fiscal deficit, and stabilise and then pay down the $6.8 billion national debt, by focusing on tax compliance and enforcement alone.

“They need to generate some of that through their own accountability and efficiency in the public sector,” he told Tribune Business of the Government targeting a “balanced” Budget within the next four years.

“Don’t just beat up on the private sector and individuals. Cut down on the inefficiency we all know exists in government.”

Mr Myers added: “I think there’s a 30 per cent inefficiency in government. That’s a massive potential saving there. Compliance and government efficiency; that’s your route to generating a surplus.

“They need to keep pushing that, and getting compliance up, and they will be there before they know it. I want to make sure he [Mr Wilson] recognises the inefficiencies out there, and the need to tighten up and get government more efficient.”

Mr Myers argued that reducing government’s inefficiency level over the next government’s five-year lifetime was a target that the Bahamas needed to aim for.

“I’m not saying overnight, but over three to four years it could save hundreds of millions of dollars,” he said. “If we can get 3-5 per cent more efficient over the next five years, you’re talking about hundreds of millions in savings.”

Mr Wilson last week said the Government had been “very aggressive” in controlling its spending, and had secured some “quick wins”, referring to fuel and vehicle fleet savings, plus an end to some 100-plus cell phone plans from BTC.

Mr Myers, though, argued that the Government needed to go much further than the steps identified by Mr Wilson at the BCCEC’s State of the Economy 2017 forum.

“What I’m talking about is not spending, but employment and efficiency,” Mr Myers explained to Tribune Business, “five people sipping a coffee while the public is figuring out how to get a permit.

“It’s basically an employment subsidisation. There are too many people in government. Government is too fat and inefficient. If you control employment and accountability in government, you will have 20-25 per cent more efficiency on top of what he’s [Mr Wilson] doing. That’s a huge win.”

Comments

OMG 2 years, 6 months ago

"fuel and fleet savings" and you think that's great ??? Government cars being used as private transport evening and weekends. Top of the line special edition hard top Jeeps for Administrators, unpaid bills by prominent persons, purchase of land at rumoured cost of millions for a new hospital on a family island, mini hospital at a cost of 14 million on Exuma never opened, clinics without basic supplies or sometimes doctors. And rumors of VAT increases after the election. So much money is being extracted from the local population by taxes and price increases that little is left for the public to spend and grow the economy. Schools depend on fund raisers and tuck shops to buy basic supplies, and local businesses are inundated with requests from the private sector to support what the government should be doing. Unless government expenditure is curbed and quickly worse is to come.

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B_I_D___ 2 years, 6 months ago

Quit beating up on the people who DO pay their taxes by increasing the taxes...make the non-payers pay...politicians and their families INCLUDED in those that MUST start paying their bills.

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athlete12 2 years, 6 months ago

"$300 million deficits despite the extra $1 billion-plus in VAT revenues"

I know revenue and profit are different but you don't think they had at least $100 mil to put toward the debt?

Bahamians should remember this quote when going to the vote. in that $1 bill is funds for food, school fees, light bills, mortgage payments etc..

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