By NEIL HARTNELL
Tribune Business Editor
The government has narrowed its $185m revenue gap, the deputy prime minister has revealed, as it “keeps a close eye” on its agencies’ spending as the 2018-2019 fiscal year-end looms.
KP Turnquest told Tribune Business that the traditionally revenue-rich first quarter of the calendar year had helped “tighten” the difference between the government’s actual and projected revenue collection ahead of the upcoming 2019-2020 budget.
Suggesting this had further boosted confidence that the year-end $237.6m deficit target will be achieved, Mr Turnquest said the Ministry of Finance was closely scrutinising all ministries, departments and agencies to ensure there are no last-minute spending binges “where there is no legitimate need”.
He added that there were unlikely be to any “major” changes to expenditure allocations in the 2019-2020 budget, with the Minnis administration aiming to be “faithful” to a three-year consolidation plan that targets elimination of the fiscal deficit and payment of $360m in total unfunded arrears.
The International Monetary Fund’s (IMF) recent visit to The Bahamas for the annual Article IV consultation had also “confirmed a lot of our thinking”, Mr Turnquest said, with the concerns it identified already on the government’s agenda to address.
He revealed that the Deloitte & Touche (UK) study of the Bahamas’ tax structure, and potential reforms to make it more efficient and equitable, had effectively been placed on hold by the need to enact reforms to meet the European Union (EU) and Organisation for Economic Co-Operation and Development (OECD) demands.
With The Bahamas having addressed their anti-tax evasion concerns, Mr Turnquest said the Government would seek to “restart” the Deloitte effort although he gave no dates for when this would happen.
The Government, meanwhile, had been counting on early 2019 to compensate for the revenue slippage experienced during the 2019 first half, and Mr Turnquest indicated that the period had not disappointed.
“I don’t have the final numbers yet,” he told Tribune Business of the three months to end-March 2019, “but I know that what we’ve seen is a tightening is a tightening of the actual versus the projected.
“I’m feeling good. We are still feeling confident that we will make our budget based on our forecast for the end of the year, and will continue to work towards that. The revenue numbers are tightening, which is positive, and we continue to keep a careful eye on expenditure through the end of the fiscal year.
“We feel pretty good about where we are, and unless something completely unforeseen happens we feel comfortable we will be able to bring it on budget.”
Mr Turnquest, in unveiling the mid-year Budget at end-February, revealed that full-year revenues were due to come in $185.43m or seven percent below the $2.649bn target due to a shortfall caused by VAT, gaming and enforcement underperformance.
He attributed this to the delayed introduction of the increased 12 percent VAT in key sectors such as construction and hotels, where concessions were granted to enable them to honour existing contracts and bookings at the old 7.5 percent rate for several months.
The anticipated increase in web shop taxes also failed to materialise due to the sector’s resistance and legal action, while the delayed creation of the Revenue Enhancement Unit (REU) threatened the collection of $80m in projected revenues from enhanced compliance/enforcement.
However, the first calendar quarter - the third in the Government’s fiscal year - is traditionally the most “revenue rich” period for the Public Treasury and appears to have cut the projected $185m shortfall.
Besides coinciding with peak economic activity related to the winter tourism season, the period features monthly and quarterly VAT filing/payment; Business Licence fee payments; the bulk of real property tax payments; and commercial vehicle licensing months.
Mr Turnquest, meanwhile, said the Ministry of Finance was guarding against long-established practices where government ministries, agencies and departments - possessing a surplus they had no need for - simply spent it before fiscal year-end to ensure they received no reduction in allocation in the upcoming budget.
“During this period agencies sometimes feel they have a need to spend the money even though they don’t have a legitimate need to do so,” he told Tribune Business. “If we’re not careful things happen, but we’re keeping a close eye on it and will closely manage it through the end of the year.”
Mr Turnquest added that the impending 2019-2020 Budget will be “faithful” to the Government’s fiscal consolidation plan of trying to achieve a balanced budget/small surplus by 2020-2021 and paying off all unfunded arrears.
“I expect the upcoming Budget to be faithful to that with some minor changes to reflect circumstances that happened in the year, and some additional priority items that arise as a result of the Government’s plans,” he said.
“I wouldn’t expect any any major changes to line item allocations in the next Budget. We’ve projected three years out and want to be faithful to that as best we can, making the necessary tweaks to to reflect current circumstances and priorities.”
The IMF recently maintained The Bahamas’ 2019 GDP growth projection at 2.1 percent, and Mr Turnquest said of the recent Article IV consultation: “We’re very pleased with the IMF visit; they’ve confirmed a lot of our thinking.
“Generally speaking, their thinking is in line with ours. They’ve pointed out areas where there is concern and improvements have to be done, which is in line with our agenda.”
The deputy prime minister, though, confirmed that the Deloitte UK taxation study - which was supposed to assess options and alternatives to the Business Licence regime among other issues - had been delayed as a result of the need to address EU and OECD concerns.
“We hope to restart that project at some point,” Mr Turnquest said. “We have our three-year plan already and will continue to work that. However, as we’ve already said, the Ministry of Finance has to be armed with the relevant research and forward-looking facts, and have the relevant options looking into the horizon.
“While not a priority today, it’s important to have all the tools available to us to address a situation that may arise.”
Economist 4 years, 1 month ago
Good Job Mr. Turnquest.
realitycheck242 4 years, 1 month ago
After this five years of fiscal consolidation by this government. It is my wish that a larger percentage of Bahamians would come to the realization that government can not be their all in all go to guy for every little penny they desire weather it from social programs or corruption.. Get up and become entrepreneurs and try to become self sustaining.with good decision making in their financial lives. Adopt prudent spending habits,develop strong work ethics.and get rid of the mindset the PLP has encouraged for too long and pay attention to the bigger picture.
Well_mudda_take_sic 4 years, 1 month ago
bogart 4 years, 1 month ago
OF COURSE ANY GUBBERMINT CAN BALAMCE DA BUDGET.....!!!!!!!!........NO ROCKET SCIENTIST...!!!!!!...TIGHTEN MONEY ON BLOATED WITH COHORTS GOVT WORKERS......HAVE ....CONTRACT WORKERS...PAYING MINIMUMS..OVERWORKING...MINIMUM ....But......ALLOWSPermanent stays after biggest national debt....!!!!!!!.....chunk of revenue for dere salaries for putting pore poorer..... DA INEPT..SUPERB KISSERS...SHOE POLISHERS...NOMENKLATURA....IN A GROSSLY INEPT INEPT ECHELONG..ELITES..PROTECT DA WEALTHY..INCREASE RICHES FOR THE WEALTHY...CRONIES.......da international Organizations know this...da da people bin frauding invoives imports to lower real taxes...tax on rich properties.....no incone taxes....no corporate taxes for da wealthy....NO TAXES ON PLAME HELICOPTERS.....no on CAVIAR.......pore wid culture of poverty....schools poor invested wid mold....gangs emerging...pore..getting poorer....learned helpnesses.....poorer gets sleeping in cars...one in Abraham St...down da road fron 5£ lots..one blind lady suffering....within few hundred feet of...... JAMES ROAD ..govt Urban Renewal...Churchs on dat street.......food lines getting longer even small van wid sign FREE BREAKFAST....going round streets....on door going ....squeezing all taxes from pore......SO WHATS DA BIG DEAL OF BALANCING DA BUDGET....ALL DIS TIME ......
BONEFISH 4 years, 1 month ago
The FNM government met a revenue enhancement unit in place.In one of their idiotic decisions,it was dismantled and it's contracted staff dismissed.True to form ,they figured out how it worked and had to re-establish it,Throwing the baby away with the bath water.This is on e of the reasons,this country is mired in these situations.Two myopic parties who took turns governing.
TalRussell 4 years, 1 month ago
Yes, yes is is according to a recent PeoplePublic Street Corner poll, no less than 84% of 91,409 comrade voters voting red shirts 2017 - say come 2022 - they collectively are done prepared vote the entire 35 red shirts House MP devils straight to hell, yes, no?
Dawes 4 years, 1 month ago
The Minister of Tourism keeps telling us about the amazing increase in tourists coming here. I would guess this increase was not taking into account when the budget was done. The Government should be seeing a huge increase in revenue due to this from departure tax, to the VAT these tourists spend when eating and drinking. If we are not doing good now in the boom time then we are done when a recession comes (and it will one day).
TheMadHatter 4 years, 1 month ago
K.P. commenting on secret financial documents is a waste of time. If i apply for a loan the bank wants to see my payslips. But he can stand up and make any claims about the nation's finances and what "payslips" do we see? What bank statement do we see?
Where is the "consolidated fund"? In what bank? What is its balance? Etc. Etc.
Your money is safe good citizen trust me. Dont worry when VAT goes to 15%, my staff are busy preparing a list of excuses that will pacify you at that time.
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