FREE National Movement Chairman Carl Culmer has said the Minnis administration's 2018-2019 budget will "solve" the "financial mess" left behind by the Progressive Liberal Party.
There has been intense backlash to the government's plan to raise the value added tax rate to 12 percent as of July 1, with many complaining that it will hurt the poor and middle class and increase the cost of living. While he did not refer to the VAT increase, Mr Culmer focused on the areas from which VAT will be removed, saying the budget focuses on helping families "provide for their basic needs."
"Our country is still suffering the repercussions of the disastrous, fiscal mismanagement that took place under the woeful PLP when they held power," Mr Culmer noted in a press release.
"...The FNM government has set a course to get our fiscal house in order - no more having a government putting themselves over the people they serve, no more back room deals that benefit the chosen few over the rest of the country and no more of the blatant corruption that marked the days of the PLP government. Under the FNM government the country has been able to pay off $400m of that massive debt the PLP left, leaving us $360m more to wipe out," the chairman said.
"This new budget provides both for the payment of $174m towards reducing the burdensome debt while at the same time laying out a plan to finally retire it over the next several years. No longer are we operating as if we have a credit card that we can keep running it like the PLP did, simply assuming someone else will pay for their charges. Those days are over and people everywhere - both across the country and throughout the world are acknowledging the fiscally responsible steps we are taking. Investors and investments are coming back to The Bahamas and our economy is steadily gaining momentum. This budget will keep that momentum going in the right direction.
"The FNM government's new budget continues to put our country on the correct fiscal path. This budget focuses on helping families provide for their basic needs and necessities by removing the VAT tax that the PLP placed on breadbasket items, medicine, electric bills and so many other items Bahamians use every day.
"The FNM is keeping its commitment to attacking the woeful fiscal mess the PLP left behind and to put our fiscal house in order for the benefit of all Bahamians. The people deserve no less and they deserve to know where their sacrifices are going. We will not hide from those responsibilities and will work together with the people to get our fiscal house in order."
Last week, Minister of Finance Peter Turnquest outlined a list of changes to the country's tax regime which would benefit thousands of families and businesses.
Then came the price for paying for these measures: VAT nearly doubling from 7.5 percent to 12 percent.
Despite touting the Minnis administration's lowering of the wage bill and the purchase of goods and services by a projected $120m - along with a $351m deficit reduction - the deputy prime minister dropped his VAT bombshell, justifying the hike by saying there was an urgent need to pay off a "mountain" of arrears and unbudgeted commitments totalling some $360m left behind by the former administration.
The government also moved a resolution last week for a loan of $187,233,623 to defray expenditure in the 2018-2019 estimates of revenue and expenditure.
Mr Turnquest attempted to soften the blow of the higher VAT rate by unveiling VAT free breadbasket items, duty reductions and exemptions.
"Effective August 1, we are eliminating VAT on all breadbasket items, with the exception of sugar, as sugar will - for health reasons - be removed from the list of breadbasket items," he said.
These items include butter, cooking oil, mayonnaise, grits, cheese, corned beef, evaporated milk, margarine, rice, flour, tomato paste, baby cereal, soups, broths, powdered detergents and mustard among other things.
VAT also will be eliminated on medicines and residential insurance.
The tax also will be waived on residential electricity and water bills at or under $200. The customs personal travel exemption also will be increased from $300 to $500 per person twice each year. Government is also eliminating duties on solar kits upon application to the Ministry of Finance.
The duty on aeroplanes and helicopters is also being eliminated. Mr Turnquest said this is in an effort to build an aeroplane registry industry.