By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The deputy prime minister was yesterday praised by a governance reformer for placing “saving the country” over political gain through the government’s economic restructuring plans.
Robert Myers, the Organisation for Responsible Governance’s (ORG) principal, told Tribune Business it was “critical for the survival of The Bahamas” that the entire Minnis administration follow KP Turnquest’s lead even though it may not receive any political benefits from it.
Backing Mr Turnquest as “100 percent correct” in recent remarks to Tribune Business about the size of government, the need to tackle long-standing structural deficiencies in the economy, and provide more help to entrepreneurs, Mr Myers said reforms in these areas “have to get done whether they’re politically favourable or not”.
“I’m very pleased to see he’s acknowledging and understanding that because that’s the first step to correcting it,” the ORG principal said of the deputy prime minister’s remarks on the costs imposed by the Government’s size.
“Getting policymakers and decision-makers to understand that is a significant danger is hugely important. We’re not going to get change unless people acknowledge change is necessary and required.”
Mr Myers warned that The Bahamas, especially the private sector and households, could “collapse under the weight of that inefficient government; no doubt about it”.
He added that the Bahamas cannot afford to take on any more borrowing to finance increased employment in the public sector and civil service, and said: “They’ve grown the Government for political reasons just to create employment because they could not do it otherwise. It’s high time that changes.”
Mr Turnquest on Tuesday said The Bahamas needed to address the “tremendous burden” that the government’s size was imposing on the private sector and households to fund it, arguing that this was depriving businesses of capital that could be put to “more productive use”.
He added that previous administrations were likely “more pre-occupied” with the political impact of potential reforms, but added that the current government could ill-afford to adopt the same mindset with the economy’s “twin pillars” - tourism and financial services - coming under ever-increasing competitive and regulatory pressures.
“The reality is the Government has been the major employer of record for too many years,” Mr Turnquest told Tribune Business, “and the burden of that public sector puts tremendous demands on the system for capital that should be employed in the private sector for more productive use.
The deputy prime minister then indicated the Minnis administration was seeking to shed the politically-led decision-making of the past by implementing critical economic reforms that might prove unpopular at first, and where the benefits may take time to materialise rather than provide an instant election winner.
“We cannot expect to really remove structural deficiencies in the make up of the economy in two, three, five years, but we have to make a start,” he told Tribune Business. “This is not one where we are going to receive any immediate political benefits from, but it’s absolutely necessary if we’re going to build a sustainable economy going forward.
Mr Myers yesterday branded Mr Turnquest’s latter assertion as “absolutely fantastic” and “spot on”, warning that time was rapidly running out to reposition the Bahamian economy for faster GDP growth rates and improved job creation.
He added: “He should be commended for his honesty, and hopefully the Government can be commended for its work in acting upon that. I’m glad to see there’s the admittance and understanding of that kind of necessity.
“The sands in the hour glass are already running thin. We already have significant debt, so if we don’t start to get that sorted out then our debt-to-GDP ratio will keep rising.
“We’re out of time. We don’t have any headroom. If we don’t start resolving that debt we will have to reduce the size of government to get that ratio down. We’re $8bn in debt; we don’t have any more room, so it’s imperative that we get this thing fixed.”
Mr Myers continued: “As the deputy prime minister pointed out, it’s not work that helps him but saves the country. Whether the voters understand that or not is a shame for this administration politically but critical for the survival of the nation.
“They understand that they may not get the benefit of that but, my God, it’s yeoman’s work. It has to be done. It has to get done whether it’s politically favourable or not.”
The Bahamas’ persistently high unemployment rate, which has remained in the “double digits” since the 2008-2009 recession despite Baha Mar’s arrival, is viewed as a sign that the current economic model cannot take the country much further and is in need of major reforms.
Many Bahamians, though, remain attached to the “status quo” and are fearful of change - something that was acknowledged by Mr Turnquest this week. With large numbers living pay cheque to pay cheque, and/or struggling daily to make ends meet, few are focused on the bigger picture and The Bahamas’ economic future.
Comments
Economist 5 years, 2 months ago
There is no doubt that Minister KPT has taken the high road in his efforts to save the Bahamian economy. No one likes to take medicine (4.5% increase in Vat and reducing the size of government), but the Minister of Finance was right to give it to the Bahamian economy or we would have been in the IMF "ICU" a year or so ago.
Well done KPT. I still don't like the taste of the extra 4.5% Vat, but I understand why I have to take it.
momoyama 5 years, 2 months ago
You are about as strong an economist as the tax-dodging nitwit who wrote that clueless drivel. The Bahamas collects 18 percent of GDP in revenues (just about the lowest on earth) to fund its governance. This includes education, healthcare, police and everything else we all rely on. We do not even bother to collect the hundreds of millions in real property taxes that foreign owners don't bother to pay each year (but they happily pay them at home). Instead of collecting these taxes and placing a reasonable corporate income tax on companies like commonwealth breweries and banks that rake in profits of hundreds of millions, these clowns place a 12 percent VAT on the VERY PEOPLE whose incomes drive all economic growth. Please change your moniker, because you are as much an economist as the clowns who are governing us.
hrysippus 5 years, 2 months ago
hey mamayoma, before you go pointing out other peoples motes in the eye, tell us how you know that hundreds of millions of dollars are uncollected from foreign property owners? Your assertion just plain ignorant as you cannot transfer a property title, i.e. sell, without all property taxes having been paid, If a foreigner owning property in this country does not pay his taxes then eventually that property will be claimed by the government in lieu of unpaid tax. And if you think the clearing house banks are raking in profits with the 30% delinquency on mortgages then tell me why most all the Canadian banks are scaling back operations instead of expanding. Perhaps you are referring to the Bank of the Bahamas though. Sigh. Another D- poster child.
momoyama 5 years, 2 months ago
Will address this point by point:
Q: How do I know that hundreds of millions of dollars are uncollected?
A: Because I am a real estate attorney who deals with it every day. You simply have to visit RPT and ask for their files. It is public information that hundreds of millions remain unpaid. Take, example, the Darby Islands, in Exuma Cays. Presently over $5 million is owing. In Bakers' Bay, collectively more than $80 million and throughout the Bahamas many hundreds of millions more.
As for waiting for it to be transferred and deducting it then, I am aware of this as I deal with conveyances every day. But since it means waiting until a buyer is found, it inevitably causes the seller to jack up the price. Which is PRECISELY why so many properties carrying heavy RPT loads are unsold and the government is owed the hundreds of millions that I mentioned above and that it will not collect it in a thousand years of Sundays.
While there is (arguably) finally a legislative means to take and resell property, it has never once been used to my knowledge (which is obviously considerably more extensive than yours).
Stay in your lane, because you have no clue of this matter.
As for the clearing banks, I do not THINK they are raking in profits. I KNOW they are raking in profits. My father was chairman of one and my uncle chairman of another for many years. Furthermore, I have the ability to read. Try it some time and pick up the annual financials of Scotiabank, RBC and FC. They all make obscene profits in our region and the biggest single chunk comes from the Bahamas. They deserve the delinquency, which they idiotically racked up pursuing unsustainable credit in the era of ponzi-scheme 'sub prime' lending, much as their counterparts did in the states. But although this has hit them, it was not enough to offset the insane money they still make on consumer loans in the Bahamas (cars etc.).
They reason they are scaling back is because by using technology to their one-sided advantage (without giving consumers any matching benefits, like online and mobile apps that actually work) they have found a scam to reduce employment costs and stretch profits even further.
Now, back to my original point: in which economics class did you learn that lumping taxes on consumers, reducing their disposable income and simultaneously exempting corporations from taxes on wealth and income helps anyone but parasitic quacks like Mr. Myers?
yeahyasee 5 years, 2 months ago
Thanks for the knowledge did not know this.
truetruebahamian 5 years, 2 months ago
Momoyama, please learn facts. You are entirely and totally off track and wrong. The intent and work done on the job at hand are crucial and the only correct direction to take. Take note.
momoyama 5 years, 2 months ago
say what?? Did you read my commentary or are you just saying something to say something?
Here are the facts:
1.we collect a mere 18 percent of GDP in revenues. The average in our region is 35 percent, in the USA 40% and Europe 50 plus percent.
The vast majority of what we collect is in consumption taxes (meaning taxes that hit the poor and middle class the most). This, again, is the reverse of anywhere else sane on earth.
Instead of taxing (even extremely lightly ) taxes on income, personal or corporate, we continue to tax the disposable income of those who spend most in supporting the wider economy. Then we turn around and wonder why we have such an inequitable society and are unable to transform FDI (of which we get bundles) into sustainable economic growth.
Now come again.....
Chucky 5 years, 2 months ago
You forget that the countries that collect a lot more in taxes as a percentage of GDP, provide a lot more value to their citizens.
If we were paying in double, let's say 36 percent of GDP in taxes, regardless of the source, we'd still be getting services / value from government worth much less than the 18 percent worth we get today.
Think about it, poor education, roads, corrupt ineffective police, ineffective and underpaid politicians- corrupt, crap healthcare.
The 18 percent of GDP that's collected now is providing about 1/2 of what it should be.
More revenue wont help if we dont import somone who knows how to actually run a first world country and provide education, health care etc etc
momoyama 5 years, 2 months ago
You are laughably uninformed. What's more your comment (that others do more with what they have) demonstrates the widespread general ignorance that is spread around this country by rightwing nutcases in the media.
With the meagre 18 percent that we collect, the UN last year ranked The Bahamas (at 8.07) is the most developed majority black country in the history of the world, in terms of human development and living standards. It is not just ranked as "high human development", but, with Barbados alone in the region (2nd) as "very high human development". And that was achieved with 18%!!!!
But you make my argument when you say that it is not nearly enough and that we can do even better if we increased our intake. But even more benefit would come if we depended more on PROGRESSIVE, rather than REGRESSIVE taxes.
DDK 5 years, 2 months ago
Chucky - UNDER paid policitans?
momoyama 5 years, 2 months ago
Our problem in this country is that ignorance of social and economic issues is so pervasive that governments are not even subject to the corrective threat of the failure of their bad policies. An idiotic and indefensible action like raising taxes on consumption (thus reducing aggregate demand) can be dressed up as "fiscal discipline" because so many of our people are so bloody ignorant.
Fiscal discipline means not only minimizing bad spending but MAXIMIZING REVENUES. It also means getting revenues from where they do the least harm (like from reasonable corporate income taxes, rather than the meager income of the consuming poor). Instead, we have a government that extends to the wealthy a tax paradise (whose economic rationale has long died, with the offshore sector) and pummels the consumer on every occasion, then calls that "discipline".
Greentea 5 years, 2 months ago
Here Here Momoyama. These paragraphs are pure fire. Clearly argued. Don't expect anymore pushback on these pages because you have presented a knowledge based argument and Bahamians - to our detriment - operate on half truths and emotions. Thanks for the comments- rather refreshing.
bogart 5 years, 2 months ago
@momayama.......WEEEELLLLLLL.......... ...RIGHT ON......THANK YOU FOR YOUR KNOW...RIGHT ON....THANK YOU....,!!!.,!!!!........
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