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‘No New Taxes’ To Pay For Dorian

Deputy Prime Minister and Minister of Finance Peter Turnquest. (File photo)

Deputy Prime Minister and Minister of Finance Peter Turnquest. (File photo)

By KHRISNA RUSSELL

Tribune Chief Reporter

krussell@tribunemedia.net

THE Minnis administration’s request for additional borrowing is not for idle purposes, Finance Minister Peter Turnquest insisted yesterday. He told Parliament the country’s insufficient resources led government to seek more money following Hurricane Dorian.

While national resources remain “significantly” less than what is needed, the deputy prime minister reiterated that there will be no new taxes and no increase of existing levies to cover costs associated with the damage done by Dorian.

New and “necessary” financing requirements amount to $540.7m but there is only $32.8m in offsetting income, Mr Turnquest explained.

He said finance officials were also looking at the possibility of gross domestic product shrinking by one percentage point as a result of the hurricane.

Mr Turnquest made the remarks as Parliament debated the 2019/20 supplementary budget. There is currently a resolution in the House for government to borrow $587.9m.

“Unfortunately, the government has very few immediate and realistic options to offset the legitimate obligations…” he said yesterday.

“We received a $12.8m payout from our Caribbean Catastrophic Risk Insurance Facility as a result of a restructured policy, which I am proud to say we pioneered. In the past, insuring with the CCRIF had unfortunately become politically charged. Not everyone was convinced the insurance scheme was meeting our needs as an archipelagic nation.

“We successfully renegotiated a better deal for the Bahamas, tailoring the policy to separate the archipelago into three geographic zones with unique parametric triggers for each region. Rather than throwing the baby out with the bathwater, we recognised that flexible insurance that allows for tailored coverage is essential to our multi-layered approach to disaster risk management and for meeting our country-specific disaster needs.

“Aside from the CCRIF, we amended the law to allow funds transferred from the expired Dormant Accounts at the Central Bank to be used for disaster relief. The government earmarked $20m from this fund: $10m of which is to support micro, small and medium-sized enterprises capital grants and credit programmes.

“If you look at the math, it speaks for itself: we have $540.7m in new and necessary financing requirements and only $32.8 million in offsetting income. We are also looking at the possibility of GDP shrinking by one percentage point as a result of Hurricane Dorian.”

Mr Turnquest said as for donations, these are far less than what the public perceives, adding many of the public pledges reported were actually in-kind and not yet received, and many of them are actually donations to private sector organisations and not the government.

According to the National Emergency Management Agency, which receives donations on behalf of government, as at January 31, approximately $9.4 million was received as actual cash donations, and another $2.8m in-kind, the East Grand Bahama MP said. He said the latter may have changed slightly as of yesterday.

Mr Turnquest said: “While this is certainly appreciated and has helped to cover costs associated with the acquisition of recreational vehicles (RV) for volunteers and staff that are on the ground working in Abaco and Grand Bahama, as well as with the temporary dome structures that are currently being erected in Spring City, Abaco, it simply is not enough to cover the greater cost of recovery of Hurricane Dorian. When you compare $9m in donated funding to cover over $400m in Dorian expenses and revenue losses, it is plain to see that our own resources are not enough for this massive response.

“Faced with this reality, the government decided that it will not impose additional tax burdens on Bahamians to cover the cost of recovery. More taxes could slow down the already strained economy as people would consume less given the need to pay more in taxes. Although we have a large budget gap to close in the immediate term, this is not a viable option.

“Therefore, the government will not be increasing taxes, or introducing any new taxes, to cover the cost of Hurricane Dorian.

“So, what are our alternative options? Well, we could slash spending by a few hundred million, but that means starving the economy of job opportunities and commercial activities by way of reduced capital and other major projects.

“Large spending cuts would also reduce the resources available to assist the vulnerable with social assistance benefits and other recurrent programmes. To balance the budget in one swoop, we would have to cut total expenditure, across the board, by over 20 percent, based on spending estimates at the time of the National Budget. Indiscriminate cuts like this would affect everyone, and not just in the storm affected islands. This is not an option.

“The operations of the government must continue to function. Again, the government realised that an economy of our size facing a $3bn hit would be further impacted negatively by massive cutbacks in public expenditure.”

While government is departing temporarily from its original fiscal consolidation plan and given the options to either raise taxes higher or to cut spending drastically, the government took a “prudent decision to raise the necessary resources through increased borrowing - and to focus this borrowing largely to fix the infrastructure and provide direct support for persons most impacted by Dorian,” Mr Turnquest said yesterday.

Comments

joeblow 1 week, 1 day ago

Why do we pay taxes at all since the government is always borrowing (and paying interest) to cover shortfalls. Seems like borrowing is the governments main source of revenue!

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bahamianson 1 week, 1 day ago

we are on the hamster wheel of life in this country. as taxes increase daily, people need more pay to respond. as people need more pay, taxes must go up. It will never end, hey, what do I know, I don't have a degree in economics, finance, or accounting. A Damn fool can see this!!!!!!!!!1

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Well_mudda_take_sic 1 week, 1 day ago

Turnquest and Minnis are lying through their teeth when they say no new taxes just as they did in the run up to the general election in May 2017. And then immediately after winning that election, they jacked up VAT by 60%, from 7.5% to 12% with devastating consequences for our economy.

Turnquest and Minnis are the most incompetent and financially dangerous MOF-PM combo our country has ever experienced. Their only idea for governing is tax and spend. Trust me, if we are foolish enough to re-elect them, they will immediately cry again that the national debt is too high (albeit because of their spend, spend, spend policies with no real belt-tightening whatsoever) and then hit us with another round of whopping tax and fee increases with huge hike in national insurance contributions. DON'T TRUST A WORD COMING OUT OF THEIR MOUTHS!

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Porcupine 1 week, 1 day ago

Mr. Turnquest said, "While national resources remain “significantly” less than what is needed, the deputy prime minister reiterated that there will be no new taxes and no increase of existing levies to cover costs associated with the damage done by Dorian." He didn't say they wouldn't raise taxes. He said they wouldn't do it to cover Dorian's costs. Just like when they said they opposed VAT, yet raised it by 60% once in office. There is no way sustain deficit borrowing and not raise taxes to cover the corruption, inefficiency, mismanagement and bumbling that goes along with it. You're right about their ineptness and lack of honesty.

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bogart 1 week ago

There is no need to be increasing Taxes, No need for new Taxes....ABSOLUTELY CORRECT...!!!!

Repratedly saying this and saying this and saying this to the people in sternest tones, straight face, dead seriousness......for months an months..knowing while this is so.........(an obviously knowing where extra monies generated from)

As an fully knowledge govt minister ...who as an individul must has a greater concern for humanity .......knowing businesses closing, workers unemployed, gap between the poor and rich fastly widening, pricers skyrocketing as businesses trying to survive, cost of living skyrocketing....the nation under recent years has become the sixth most expensibe nation.....!!!!!!!.......AND THERE IS NO NEED FOR NEW TAXES.......BECAUSE FOR YEARS THAT THE REGRESSIVE VAT TAXES ...OFF THE POOR MOST...MOST...BRUTALLY INFLICTED UPON THE BACKS OF THE MOST POOR IS THE MOST AFFECTED...MOST AFFECTED TORTURED TO PAY MORE TO GET FEWER FOOD AND COMMODITIES TO FEED CHILLRENS.....TO SURVIVE...!!!!!.....

Increase in regressive VAT taxes raking in truly does not need for NO new taxes...!!!...it is why the nation became the sixth most expensive in the world...regressive tax off the backs of the majority living in misery, high unemployment, crime, etc an pushing businesses to survive.

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