Where’s the ‘modern governance’ pledged in return for VAT hike?


Robert Myers


Tribune Business Editor


The Bahamas is not getting the “modern governance” promised in return for the VAT hike, a leading reformer blasted yesterday, with people “sick and tired” of financing a bloated public sector.

Robert Myers, the Organisation for Responsible Governance’s (ORG) principal, told Tribune Business that not only had the promised governance improvements failed to materialise but the Government was also missing its fiscal deficit and debt targets.

He described the 2017-2018 deficit’s $105m overshoot, compared to year-end projections by the deputy prime minister, as “too big a swing” for comfort, arguing that the Government will be “perpetually struggling” with a problem “dangerous for running a country” unless it implements proper public sector controls and accounting standards.

While praising KP Turnquest and Marlon Johnson, the Ministry of Finance’s financial secretary, for their efforts to “get the fiscal house in order”, Mr Myers said the Bahamian people were continually having to pay for waste, inefficiency and under-performance in the public sector through ever-increasing fees and taxes.

He directly attacked the Government’s newly-published Fiscal Strategy Report, which justified the 12 percent VAT rate increase and other tax rises on the basis that the Government was not earning sufficient income to meet the country’s needs, on the basis that Bahamians had yet to reap the benefits from losing more of their income in tax dollars.

“It talks about increasing taxes to finance modern governance,” Mr Myers told Tribune Business of the report, “but we’re not getting it. “Even more upsetting in that statement is not only are we not getting modern governance; we’re missing our targets.

“It is the largesse and inefficiency of our public sector that causes these increases in costs and taxes. They’ve got no control over these state-owned enterprises (SOEs) which are over-staffed, inefficient and under-performing. It’s high time they address the largesse and inefficiency of the public sector.

“They can’t keep coming to the public and raising fees and increasing taxes, and not address that gorilla in the room. The public are saying they are sick and tired of increasing fees and taxes to support largesse in government. Create a modern government that’s efficient and not bloated.”

The Fiscal Strategy Report, which sets out the Government’s medium-term Budget projections and thinking, said the Minnis administration had no choice but to increase revenue yields via tax hikes because it was not earning sufficient income to meet its needs and those of the Bahamian people.

“As amply demonstrated in recent years, the revenue yield of the tax system was grossly inadequate to the needs of modern governance,” the report said. “The various revenue measures in the 2018-2019 Budget, including the increase in the rate of VAT from 7.5 to 12 per cent, are projected to secure a boost in revenue collections from 16.1 per cent to 19.9 per cent of GDP.

“While lagging regional norms at that level, the increase in the tax yield is nonetheless appreciable and is poised to make a significant contribution to the attainment of the Government’s key fiscal objectives.”

Mr Myers, though, argued that Bahamians had yet to get anything in return - in terms of improved governance and public services - for reduced living standards, higher living costs and lower disposable income that have resulted from the VAT increase and higher energy costs.

These were cited as the principle grievances among protesters who took over Rawson Square and Bay Street on Wednesday, and the ORG principal also challenged the Government’s decision to compare revenue yields to those of other Caribbean states.

Mr Myers told Tribune Business that the Government was “trying to make itself look good by comparing itself to the rest of the Caribbean”, which was just as - if not more - inefficient, and included countries such as Jamaica and Barbados whose national debts exceeded the size of their economies.

He added that the private sector never compared itself to poorly-performing rivals, saying: “If we did that in business, we’d all be out of business.”

Mr Myers said the 2017-2018 fiscal deficit, which overshot both the initial and year-end forecasts by $94m and $105m, respectively, highlighted the need for the Government to rapidly transition to accrual-based accounting that recorded spending commitments when they were made and thus presented a more complete picture of its financial affairs.

“We’re not happy about the lack of fiscal controls that happened at a time prior to the Fiscal Responsibility Act,” he said, while praising Messrs Turnquest and Johnson for their intent. “My impression, and I think they deserve credit, is that they are trying to get their fiscal house in order.

“But this further wildly indicates they have to move to accrual-based accounting or they will remain perpetually struggling, with the right hand not knowing what the left hand is doing. That’s just dangerous from a Budget standpoint and trying to run a country.

“That’s too big a swing. It’s too big of a swing,” he added of the $415m deficit. “It’s a function of your accounting processes. It’s telling you; it exemplifies the fact there aren’t enough controls in the current accounting system, and we must move rapidly to an accrual system. They need to make good on that promise. We’ve got to stop talking and do something about it otherwise we’re failing the country down the road.”

Emphasising that he was not picking on the current administration, Mr Myers said inaction would simply push The Bahamas further away from fiscal sustainability.


TheMadHatter 3 years, 10 months ago

People don't need to know where the VAT money gone. Just pay ya tax and keep quiet. In 2022 you can put the PLP back in again.


Gotoutintime 3 years, 10 months ago

Hey, Maybe we can bring back the UBP??


bogart 3 years, 10 months ago

YES...FRIENDS OF MINE GETTING FRUSTRATED BY ....INCOMPETATENCE.....PISSED OFF.....ONE COMPLAINS OF VICTIMIZATION....NO RESOLUTION....no helps to uplift.many just seem to do nuttin....what dey didnt know is....dat the person has phenomenal reach in international community.......sometimes gubbermint cronies just too cronies....to not realize.....sometimes to be laughing at the pore Bahamians ....dey fails to notice pore oppressed...wreched...downtrodden....have friends elsewhere...what should have been cataclysmic....changes fer da better........vapourized........regretably...seems to benefit some..extremely simple basic...tings of security.....assuramces....address blatent shortcomings.....and people daring to openly protest against the biggest majority there ......gut wrenching hurtful stories from my friend.....


ThisIsOurs 3 years, 10 months ago

The problem isn't that government is too big or that they don't get enough revenue. The problem is in who they hire, entirely.

Just look at our electricity bills , the rate hike can be laid entirely at the feet of a bad choice in the CEO and the board. The CEO initiated a costly VSEP operation that saw major talent leave the company with no plan in place for replacement, he then acknowledged in less than three weeks that there was an issue with resources and they'd have to bring the same people back on contract. If that isn't incompetence what is. And it doesn't say that he's not an intelligent man, it says he's the wrong man for THAT position. And you wonder how he got there in the first place. Easy, someone who didn't understand the qualifications tangible and intangible needed in the post hired him. Incompetence replicated itself.

Then he allegedly gave the order to have a ginormous aging generator restarted with no one in place to monitor the startup as per usual procedure, and all against advice of the engineer he gave the order to. the engine burned up causing a doubling and tripling of electricity bills to every individual and business in the country. All because ONE man was hired for a job he's not qualified to do. (I surprised I een hear Rupert Roberts complain yet).

And here's what happens, when the CEO needs staff, will he hire someone who tells him that what he's doing is not the right way or will he hire someone who tells him what a great leader he is. That's our problem. Incompetence is replicating itself for its own survival, it's literally everywhere.

We could use the same example for finance, these guys implemented an illadvised VAT hike that everyone advised them was the wrong thing to do. And I mean every financial expert PLP, FNM, DNA, Independent said the same thing. Yet they bullied through confident that they could bring in 400million "extra". They're the wrong people for the job, but even in their wrongness it looks like the FS has been confirmed in the post.

Incompetence is replicating itself. That is what's killing us. They can cut half the people in the service , it doesn't matter, we already know the outcome, the incompetent people who are friends with the PM will be allowed to stay. And the debt will grow. Incompetence will replicate itself

And btw I don't believe the bills run up on us story. Contracts are a great way to get money out the treasury


OMG 3 years, 10 months ago

Thisissours, not even the most competant CEO can ovetcome ancient generaors without cash reserves to replace them. Old attitude of those in power - if it runs howver bad leave it alone and waste the cash on wasteful projects.


bcitizen 3 years, 10 months ago

Who needs generators and electricity when we have a hotel?


ThisIsOurs 3 years, 10 months ago

That's beside the point. The most competent CEO would not have organized that VSEP exercise or burned up the generator causing electricity rates in the entire country to triple. And then pay a firm to find out why rates are so high...you can't make this up


DDK 3 years, 10 months ago

Very true and highly ridiculous.


birdiestrachan 3 years, 10 months ago

Praising Turnquest and Marlon Johnson for what? Taxing poor people beyond endurance?


sheeprunner12 3 years, 10 months ago

I am of the opinion that if a group of white Bahamians from across the country were to organize themselves now to run in the 2022 General Elections that they will get a lot of votes and maybe win some seats ...... We are talking about 10% of the population making a serious showing to change the mindset and culture of this country ........... white Bahamians contribute so much to this country without any serious PR effort to play a serious political role .......... and it will not be the UBP bogeyman.


ThisIsOurs 3 years, 10 months ago

I een voting for nobody just because they white...or black..or female


DDK 3 years, 10 months ago

Right on Mr. Myers! Pay attention Government before it is too late - we are striding closer to that point daily!


BahamaPundit 3 years, 10 months ago

Same exact thing is going on in South Africa as The Bahamas. I have been reading the posts. Here is one:

Citizen_Defarge • 2h We knew, we’ve always known. The thing is that everyone who can do something about it has their hand in the pie already and everyone who calls them out about it is “racist”. We live in a fun country, to say the least.


Let me say this... Ethics are determined by what is socially acceptable in the environment that you are in. Whether overtly stated or subjectively implied. We have to accept that it is common practice in South Africa to be corrupt and it is socially acceptable to be corrupt, because the evidence shows the majority of our officials act in this way while the public condones it.

You’re only in the wrong when you “get caught” or are someone else’s scapegoat.

South Africa, has too much riding on people acting honestly and too few people doing so. We’re off the precipice and free-falling at this point.


BahamaPundit 3 years, 10 months ago

Here is the article title:14,000 government officials caught doing business with the state: report


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