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Insight: Everything To Lose And So Little To Gain

Prime Minister Dr Hubert Minnis.

Prime Minister Dr Hubert Minnis.

By MALCOLM STRACHAN

PRIME Minister Hubert Minnis has been unwavering - perhaps even deluded in his claim that his government will save The Bahamas. But save The Bahamas from whom? It is his own government that could be poised to plunge it into economic ruin.

Meanwhile, Deputy Prime Minister Peter Turnquest could not be more aloof as he leads the crusade to prevent (as he puts it) looming economic Armageddon.

You shouldn’t hate a man for his ambition, but you can if his goal prevents you from achieving your own. The government’s plan to pay down the deficit by 2021 will certainly slow the country’s economic growth in the short-term. Not many will be spared the potentially gruelling effects of what’s to come, as the pinch that people felt when VAT was first implemented will be magnified.

People are at risk of being unemployed by the end of the summer. Crime, while there has already been a flurry of recent killings, will likely increase under harsher economic conditions. Parents whose high school graduates are getting ready to begin college at home and abroad will have to adjust to the new economic realities.

The outlook isn’t an enticing one for would-be entrepreneurs hoping the government would focus on creating an environment conducive to their success. Despite the FNM campaign promise to do just that, businesspersons are likely to be hesitant as consumer spending power is about to shrink.

Understandably, this is not the environment many had expected the government to create. Though the government promised a land of milk and honey, soon after coming into office they broke the news of just how dire a fiscal situation the country was in.

However, this should hardly have been a surprise to the current minister of finance who was previously the shadow minister of finance. Should he not have been privy to some of the knowledge, rather than being so shocked to find out? One would certainly think so. Yet, while the government has talked gloom and doom – and claimed rampant corruption by its predecessors - since taking office, there has not been one single conviction in the courts.

Indeed, rather than those who the government says acquired funds through malfeasance, now it is the least fortunate citizens that will be most affected.

It is disappointing that after five long tumultuous years under the previous administration that we find ourselves here. Except, this time, we are being led by true wolves in sheep’s clothing, who dare to say they serve the interest of the citizens of The Bahamas.

What is most insulting is despite a lack of consultation and the outraged response of the public, the government continues to suggest that they’ve produced a “people’s budget”.

Certainly, they could not seem more disconnected and unaware of the pulse of the people.

If that were the case, why has the government’s intent to balance the budget not been received as warmly as they may have anticipated? The method that the braintrust has come up with to hike VAT from 7.5 percent to 12 percent has resulted in widespread fear that less fortunate Bahamians will have their backs broken under the new tax regime. While the government may tout the exemptions also listed in the budget, they are hardly worth mentioning in comparison to the sudden decrease in our purchasing power.

Where will the Bahamian people scrounge up the disposable income to take trips to utilise the $500 exemptions? How militant would a family have to live to keep their light bill under $200 with the rising costs of fuel? How can we celebrate VAT exemptions on medicine when going to the doctor will become so much more expensive? The callousness and inconsideration on the part of the government is astounding.

Moreover, the government’s plans to introduce a sliding scale tax on the local gaming sector that can result in businesses paying up to 50 percent of their revenue has also resulted in intense debate. Regardless of which side of the gaming divide you land on, it will be regular citizens such as you and me who suffer as a result of the government’s pursuit to snuff out this industry.

People are concerned that their jobs are on the line. Can you imagine the government setting in motion a ripple effect that results in you losing your job by the end of summer? That would make it two years straight that the government’s actions have led to the Bahamian people being out of work during the back-to-school period.

Notwithstanding the massive debt that the country has incurred over successive administrations, this becomes an issue of timing. There is no definitive reason that has been given to the Bahamian people that expressly says why the budget must be balanced in three years. Perhaps there is none other than the government not wanting to set something in motion that another government can take credit for. But this is hardly a goal that is in the best interest of the people.

The current administration, who has also borrowed well over a billion dollars in its first year in office, seems to not take into account how high they have turned up the heat in the economic environment.

Last week’s rally, which at times became very tense, showed some of the rage people feel towards the government as a result of its actions. Protesters booing, chasing, and throwing water on Members of Parliament - while not a civilised manner in which to protest - are indicative of the public’s furore over the government’s decision to increase taxes.

The protestors ranged from regular citizens to employees of the gaming sector, as well as members of the Progressive Liberal Party with obvious political agendas.

Justifiably, the Bahamian people have not been taking this well. Many are still in shock while others are banking on the government to lower the rate. Although some party-blinded Free National Movement supporters are defending the government’s decision, we also still have a few citizens that prefer to take the bitter medicine being prescribed by the government now, rather than later.

Despite opinion polls showing that the people do not support the Budget, and worse, do not support the government, the Minnis administration is steadfast – which may be to its own peril.

Poor people across the country see the government as tone-deaf and inconsiderate of what will happen to the “small man”. While some MPs have accepted what may be the fate of this administration in 2022, one has to wonder - why they would take such a gamble in a scenario where nearly everything has to go right for their plan not to backfire?

As it stands, the public’s confidence in this government knowing what they’re doing is all but non-existent. Surely, there is little doubt that the Minnis administration has pulled the pin on not only an economic hand grenade, but a political one as well.

Our only hope is that whatever may come, we are able to withstand it and thrive in the long run.

Comments

Economist 1 month ago

The FNM Budget is far less painful than the alternatives.

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BONEFISH 1 month ago

This can be dealt with differently. You don't know what you are talking about.

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Economist 1 month ago

Please detail how it can be dealt with differently.

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BONEFISH 1 month ago

They should have never disbanded the revenue enhancement unit at inland revenue. They need to curtail recurrent expenditure.They need to sell or close some government corporations.They need to privatize some services provided by government. Example residential waste management.Have civil servants contribute to their pension .Have a very focused effort to collect real property tax.Johnson's appointment as FS should never have been done.

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Economist 1 month ago

I agree all the above has to be done, but it can't be done all at once without putting thousands of Bahamians out of work overnight.

To cut down on recurrent expenditure, in a meaningful way, they would have to terminate 3,000 to 5,000 civil servants, of the bloated civil service, or cut their salary by 15%. They have said that as people retire they will not hire new replacements and those who are not showing up for work, will be terminated.

They have said that they are looking at ways to get rid of the government corporations, but again they can't put thousands of people out of work.

I am aware that several notices have gone out to real property owners with further intention to enforce.

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Well_mudda_take_sic 4 weeks ago

You never give a proven spendthrift and willy nilly borrowing government the unchecked right to continually increase your taxes, fees and other costs. Doing so enables such an undisciplined and incompetent government to go on uncontrolled 'vote buying sprees' by having the ability to grow the size of the public services sector, increase wasteful social services programs and borrow even more, with no serious regard whatsoever for reducing annual deficits and the national debt. Feeding the Minnis-led FNM government more taxes is the equivalent of giving the key to the front door of a pharmacy to an opiate addict in the final stages of his or her miserable life - that's the sad pathetic state our country is in today - we are on our last legs and more taxes is not the answer. The pain of IMF forced belt tightening down the road will be infinitely worse than it would be starting right now.

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licks2 1 month ago

Then tell us how!! THIS REPORTER IS ONE MIXED-UP PERSON. . .I guess he will retort that I am a Minnis supporter. Let me give a lil taste of where he has gone side-ways of reasoned reporting!! The march was an indication of how the general people feel! That dang march was web shop workers who were forced to go down town and make noise of loose a days pay or possibly their jobs. . .WITH THE NUMBER BOYS! Then the other side was the criminal party who just want to get back in power. . .they will say anything. . .do anything. . .tief anything to benefit themselves!! Just saying. . .if ya want to report. . .at least learn how to reason fairly. . .

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ThisIsOurs 1 month ago

Minnis said he went to COB to talk to the economics students. If this were a comedy they couldn't make up better lines. I can see him there asking 18 year old students what they would do to fix the economy. What are your ideas? But never once has he sat down with the real economists in the country to get their ideas. It's truly unbelievable. And KP my goodness the man who before the election couldn't come up with one bright economic talking point on his own, has suddenly become an economic guru.

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licks2 1 month ago

Just how much you know about anything. . .them "real economists" you talking about are here showing how to get it done. . .OECD, IMF, IDB, WORLD BANK ect. . .and yes. . .new mind. . .minds apolitically contaminated by colors. . .the wave of the future!! Our economists are too political. . .each want to "sing" only for the opinions of their party!! Its called the wave of the future. . .

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ThisIsOurs 4 weeks, 1 day ago

Them international economists telling you to do things big countries do that have no benefit to small island states. WTO for example , still waiting to hear what we're going to trade and how we're going to win any fight against the big 7 when the penalties are non binding.

. "Our economists are too political", is that the new talking point? Boy I really hope you're not one of the FNM's top advisors...From what I'm hearing everyone is saying exactly the same thing about this vat hike, "too much, too soon". KP even admitted today that it's an insane pace and he's cramming this balance the budging thing into three years because he's not sure the next govt will have the same goal. What kind of, Ill use Gowon's word, "asinine" policy is that? Break the country so you can say I did it.

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momoyama 1 month ago

Please change your moniker. Whatever you are, you are clearly NOT an economist. This false narrative about being bitter medicine is patent nonsense. There is nothing medicinal about this idiotic budget. Every economist, from Sir William Allen to Gowon Bowe to James Smith has said that the essence of a functional VAT regime is that it is kept low with NO exemptions. This is because exemptions make it hard to administer (fraud) and make no sense, because, by focusing on a set of products rather than the people you are seeking to help, they are really not targeted at all. So the poor still suffer from the generalized increase that affects everything around them. This is basic economics 101. Nobody who has studied VAT implementation would disagree.

This government has done the foolish and paradoxical act of raising the level by 60% and adding exemptions. In doing so, they did not present one iota of empirical data either to show that the shock 60% increase will not damage the economy, resulting in lower yields than, say a 10 percent rate without exemptions.

If you want to help the poor, you target them with either direct subsidies or subventions, NOT exemptions that destroy the administration of VAT. The budget is pure idiocy. If you disagree, please cite one serious economic thinker in the land who supports you.

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realitycheck242 1 month ago

"Surely, there is little doubt that the Minnis administration has pulled the pin on not only an economic hand grenade, but a political one as well." Surely it is better to pull a pin on an economic or political hand grenade now than to let the Bahamas explode in a economic time bomb a few years down the road. Something Barbados is facing today. ....The PM is quoted as saying "country first" ...When will this PLP apologist writer get it. The Gov is trying to save this country for future generations, something the all for me baby crowd cannot comprehend. Just sitting back writing foolishness and waiting like vultures.to get back at the cookie jar.

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Well_mudda_take_sic 1 month ago

Just read Minnis's lips. Just like Christie when VAT was first introduced, there's a lot of scare talk with no mention whatsoever of detail plans of any kind for much needed belt tightening throughout the public services sector and our government owned corporations. We will find in a year or so from now that our additional VAT dollars have once again been used to further grow the size of government and social welfare programs rather than reduce our annual deficits and national debt. Minnis has proven time and time again over the past year that he simply cannot be trusted.

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birdiestrachan 1 month ago

Minnis can not be trusted because he speaks with a forked tongue and he thinks he is cute and knows what he is talking about. he is hurting the poor people, he is the one who said he cared about the poor. his new taxes will oppress the poor and those who can afford it least.

Doc God does not like it when the poor are hurt. and he says vengeance is nine and he will repay. When the poor get on their knees and tell God what you are doing to them, you and Turnquest and the others will see.

can any one imagine making $300 and the government taking $36 off the top and all the other increases that will result from the VAT increases.

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licks2 1 month ago

You would prefer we take in 100 millions , gave it to one PLP minister to look after and millions gone missing. . .that's cool with you aye? But I had to laugh when you said doc think he cute. . .now we all know you playin. . .doc ogly!

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killemwitdakno 1 month ago

"Taking it now rather than later" whislt the economybis having some activity with Baha Mar is the only thing to have me consider. Howvwer that doesn't mean its will be dropped once balanced! And if the method is raise whilst high, when is the individual to earn and save form a good economy?

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killemwitdakno 1 month ago

The difinitive reason might be WTO or the EU, never sure which shadow government we're dealing with as they never say.

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licks2 1 month ago

Both. . .and more. . .including the UN!! Yinna had a long ride for free. . .playing cheap, dumb and banana republic political games!! The world is now asking us to step-up to the plate and act like we got some sense. . .and stop our one-horse-town government style. . .

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proudloudandfnm 1 month ago

There will never be a convenient time to CUT taxes. But if government truly wants this country to prosper and grow that is exactly what has to happen. So that is my alternative. Eliminate duty entirely. Then watch us grow.

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concernedcitizen 1 month ago

Its really quite simple .Since independence we have been borrowing to employ one in four workers on the government payroll . Add in massive corruption and waste ,,well now its time to be the piper ,,Even w a bit skewed revenue stream , remember our 1,5 million stop over tourist are also paying taxes on anything they buy or consume that duty has been paid on , does any really think a country can afford 1 in 4 on the government payroll w out massive borrowing .Also don,t forget massive amounts of our stolen loot by the crooked ploloticians is hidden away abroad through phony consultant fees etc,,Well folks unless u want daddy ,auntie or sis sent home from there unneeded civil service job its time to pay the piper and put a freeze on government hiring ,,It really is that simple

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bogart 1 month ago

Time to take offers...sell..sell sell sell sell.look for partners...sell money losing state agencies, shares....bisx, arawakportshares, bec, w & s, bob, bahamas air......absolutely incredible.....

not one of these state concerns up for sale.????...but more VAT taxes ...and more VAT...money from pore to propp dem up.??... ask a pore man if he wont sell da $100,000 car costing him plenty amd he would sell....ask the rich man catchin hell of he would sell the $100,000 car in he garage and he would find some fool to buy the gas an keep it....

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DonAnthony 1 month ago

This is the big issue I have with the budget. I hate taxes and loathe vat increasing to 12% but I appreciate we are in a dire fiscal situation, primarily because of corrupt and wasteful PLP administrations. Just look at Barbados which suspended foreign debts payments and have gone cap in hand to the IMF and see where we can be in a few short years. My problem is that we should have cut back on government expenditures, it can not simply be increasing govt revenues through higher taxes. We need to sell even at a loss, these govt ministries that perennially lose money. Bahamasair has lost half a billion dollars since independence and the minister just announced plans to expand routes and buy more planes? It is madness, every dumbass politician comes into power and thinks they can run these corporations efficiently and profitably. No one ever has! Can not name a single govt Corp that is profitable. We need to divest ourselves from these sinking ships now and forever. Sell them off to prevent further administrations from continuing to run them in the ground. Then NHI, we are BROKE so why the hell are we budgeting 40 mill to continue something we can not afford. It is a wonderful hope but we need to cut back on services and the size of govt. we can not simply tax our way to a balanced budget.

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DDK 1 month ago

Why, oh why won't they listen?????

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ThisIsOurs 4 weeks, 1 day ago

Barbados has nothing to do with our situation, according to Owen Arthur they were printing money to pay debts and no one not even the local banks would lend them money. We're nowhere near that. Johnson and KP bragged about the number of investors willing to throw money at them.

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concernedcitizen 1 month ago

actually Arawak port shares were availuable to buy ,,even in small lots at the beginning ,,who in there right mind would buy BEC,B AIR ,,A deal has already been made for Shell NA to come in and build a new power plant and provde reliable power at a better rate

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DonAnthony 1 month ago

Actually there are many entities that would like to buy BEC and Even Bahamasair. It all depends on how the sale is structured. We would have to assume the pension liabilities and other outstanding debt ( which we have to pay anyway) and practically give them away but at least they will not be a drain on the treasury for infinity and might actually be run profitably in the private sector. But that means losing political patronage ( dishing out jobs to supporters) and taking on the unions and no govt even this one has the guts to do that.

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birdiestrachan 1 month ago

Added to the :litany of FNM sins. They closed off a road from the masses to please a few which resulted in the loss of life. The elite can just tell doc what they want never mind the poor. he has been told by many those who are rich with this worlds riches that he is hurting poor people but he does not care.

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birdiestrachan 1 month ago

All this talk about the PLP hiring just before the election, The FNM government did the same thing. The PLP handled it differently they did not fire them.. The FNM is doing the same things they said the PLP did only worse. they started the 52 work program the FNM

Papa remember that it was not that long ago, remember Fletcher God rest his soul . It is their history

Pay attention to sands contract with Barbara Hanna

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Freebird 1 month ago

The new VAT proposal will kill the economy of the Bahamas and there is no need for it. It is simply the lazy and irresponsible route the Government is choosing to make. 100’s of millions of dollars have been stolen and after a full year the FNM has not prosecuted a single person. If they wanted to raise revenue this would be the first place to start. Other ways to avoid VAT. 1. A national lottery. 2. Legalization of marijuana. $160 million worth was just descovered in Abaco. A 30% tax would create $48 million in revenue. Never mind all the jobs it would create. Colorado solved its debt problem just with this one move. We must find other ways to create employment. 3. Collect the 100’s of millions of outstanding taxes. Especially property taxes. 4. Sell Bahamas Air. This cost the country $20 million a year. 5.Get out of the Broadcasting Business. Another 10 million a year or more of waste. 6. Sell BPL, This is the single largest albatross around the taxpayers neck. 7. Get serious about immigration. The Bahamas simply cannot afford to look after all these people. Not a single administration wants to touch this one. 8. Cut the public sector in half. It will not be popular but it is way more effective than taxing the country to death. This is only a fraction of the things that can be done to improve the debt situation. Unfortunately this requires real work. It requires not being popular. By introducing more VAT the waste and corruption never get addressed. 4 years were at the same place except the country is in ruins. The PLP takes over in a landslide and introduces 17% VAT because the country is still broke because the structural problems are never addressed.

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TalRussell 1 month ago

Ma Comrades, I don't know where PM gets his data but I wouldn't rule KP out. The PM is entitled to his views, but if he insists on being delusional, I'd strongly recommend he go and do it by he self - without running country into economic hell-hole, and why not takes that other delusional Imperial red shirts, KP with him.... a man's like none other who has thorough understanding governing delusions.
Amen!

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concernedcitizen 1 month ago

People keep saying sell BEC ,,a deal has already been inked for Shell NA to build own and operate a new power plant in NP ,,That is basically selling ,or privatizing BEC

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DonAnthony 1 month ago

No it is not selling or privatizing it. This deal simply concerns the generation side of power, the distribution will still be in govt’s hands, still dealing with this terroristic union that constantly threatens to place the Bahamas in darkness whenever there is a dispute. These BEC union leaders are criminals who threaten to sabotage and in the past have sabotaged and turned off power to meet their own ends. Bahamians are tired of this shit, you seem to love the status quo. We need BEC totally privatized to crush this union and remove this threat to the Bahamian people. Even if this FNM govt reduces staff size which we will be paying another $20 million to do, which we will BORROW, then subsequent govts will simply dole out jobs again and we are right back where we started. Only way to fix this is to privatize BEC totally, forever.

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Dawes 1 month ago

Whilst i am not happy about the rise in VAT i do wonder what the Government could have done which would have pleased people. Since coming to power they have reduced the size of Government, and every time they did that there was uproar over how heartless the Government were being. Now they go the other way and increase revenue and there is uproar. It is high time we realise that we can't go living with these deficits year after year. Yes this country has never had a surplus, but up to about 2005 the deficit was never that bad, since then it has grown year in year out and we have hardly anything to show for it. So either we cut expenditure which means laying off probably 5-10,000 people or increase revenue.AS to selling off Government entities i am all for it, of course as soon as that happens people will be in uproar when Bahamasair says they aren't flying to X island as it is not profitable. On a side note, i think they went to 12% VAT one time so with WTO they wouldn't have to increase VAT again in a year or two when duties come down.

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DDK 1 month ago

"On a side note, i think they went to 12% VAT one time so with WTO they wouldn't have to increase VAT again in a year or two when duties come down. "

If that was the case, why did they not say? so Instead they have promised the VAT will come back down when we accede to the terrorist WTO. At some point we have to realize they are full of it!

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DDK 1 month ago

Good insight Mr. Strachan; they have indeed taken the lazy and heartless way out!

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DWW 4 weeks, 1 day ago

Did you know the Office of the Prime Minister spent $83,000,000 in one year. Guest which year? 2016-2017 strange it was just before election. Why no inquiry into it? The PM is always untouchable in this counrty right? http://www.bahamas.gov.bs/wps/wcm/connect/4a48336d-297a-434b-9790-343451c3aaea/RecurrentSummary30052017.pdf?MOD=AJPERES

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DWW 4 weeks, 1 day ago

Collectively Ministries of finance, inland revenue, customs & treasury spent $827,000,000 in 2017-2018. this is $2.25million every single day. Why don't we look at streamlining this instead of saddling the people with more taxes.

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DWW 4 weeks, 1 day ago

Why is there a Department of Education ($200M) AND A Ministry of education ($100M)? Seems like a waste and duplication of efforts? or is there more to this than I am aware? don't get me wrong i think we should increase spending on education but spend it on teacher salaries and benefits not more beaurocracy.

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DWW 4 weeks, 1 day ago

And again, why is there a Department of Local Govt. and and Ministry of Local Govt.? seems all the government entities have both departments and ministries. Why? Does the Ministry exist to tell the department how to do its job or the other way around?

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DWW 4 weeks, 1 day ago

Heres a good one. $7,538,300 on the post office but you don't actually get any mail in this country. electricity bills come 4-6 months after they are due. a friend mailed a postcard from the UK in 2017 and i still haven't received it.

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DWW 4 weeks, 1 day ago

What exactly does the Ministry of Grand Bahama do that it costs $10,000,000 to $13,455,300 every year to do? Can anyone tell me what this ministry does and spends all this money on? oOr is it just a great way to slush tax payer dollars? Freeport is a a "Free-Port" it doesn't generate taxes so why should the rest of the Bahamian tax payers cover any expenses there. What am I not understanding?

http://www.bahamas.gov.bs/wps/wcm/connect/4a48336d-297a-434b-9790-343451c3aaea/RecurrentSummary30052017.pdf?MOD=AJPERES

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DWW 4 weeks, 1 day ago

The REAL IRONY is that the FNM is now spending more than the PLP ever did, but no one is asking where the money is going. Under PLP Actual 2015-16 - $2,375,313,201 Provisional 2016-17 - $1,891,540,515 "Actual Estimate (sic)" 2016-17 - $2,320,701,622 Under FNM Estimate 2017-18 - $2,675,887,437 Forecast 2018-19 - $2,449,091,557 Forecast 2019-20 - $2,460,745,975

and all yall complainin about a little bit more VAT :)

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DWW 4 weeks, 1 day ago

Is it really necessary to spend $110,000,000 One Hundred and Ten Million Dollars on Ministry of Tourism? I mean, don't the hotels have advertising budgets? Why does the government take on the advertising for Atlantis and Bahamar? Can't they do it on their own? Since i'm on the topic, what exactly does MoT do? I've seen ads on a London cab a few times (that one time i scrounged up enough money to pay for that exorbitant trip), and I heard they advertise the Bahamas in New York. Then there was that $100,000,000 One Hundred Million dollar super bowl ad. it was pretty and gave me a little pride but did i want to help foot the bill? definitely not. All I'm saying is - Is $110 million worth the investment? would not tourist come anyway? Would not the cruise ships visit anyway? would not Atlantis stay booked on their own advertising budget? And is the 4 sentence write up on the www.Bahamas.com website for each island really good value?

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