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Bowe: Don’t expect significant changes from a new gov’t

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Gowon Bowe

• Calls for privatisation exercise to boost treasury

• Says focus should be on long-term plans for tax reform, economic growth

• Warns incoming government not to dismiss need to raise taxes

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A LEADING financial expert doesn’t expect a new government to make significant changes before the mid-term budget which is due next February.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business: “We have to respect that governments are continuous. We’ve had a budget that was actually presented in June of this year and has gone through a parliamentary process and passed into law.

“If we are thinking that that was a fictitious budget then we have a significant credibility issue with the outside world. So, I would submit that whatever has been submitted in this budget for this exercise all political parties sat in the House so it is going to continue.”

The new administration should focus on the objective of carrying forward long-term plans for tax reform and economic growth rather than looking backwards, said Mr Bowe.

“When we talk about the economic situation, we talk about the debt situation and how we arrest the growth in debt,” he said.

“That means that when we look at our current fiscal situation we tax less than 20 percent of GDP, most developed countries tax at 25 percent so there is some headroom as it relates to how much the production in the economy can be directed towards governments.”

Calling this headroom an opportunity to raise taxes, Mr Bowe warned the incoming government that to say there is no need to raise taxes is “really playing on vote catching, sentiment and emotion”.

“I don’t want it to be an overemphasis on taxes, because we also need to grow the economy,” he said.

“We need to be doing things to allow the economy to expand, so that the tax burden can be kept at minimum levels.

“That is also going to call for some expenditure control, because it is going to have to be how we reduce those elements that previous governments have argued are consistent costs.”

 These costs are labour, interest on loans and the day-to-day operation of government wasn’t as high 40 years ago.

 “So we have to find a way to have those costs absorbed by the private sector,” said Mr Bowe.

 A privatisation exercise to boost the treasury should not be an option, he said.

 “But rather the first thing the government should do is look at the accrual based accounting because one of the sides that doesn’t get spoken about is the government’s inventory and government assets. If you were to ask the government what buildings or what infrastructure roads or water mains, electrical lines that the government itself installs and not just merely the various utility companies, they probably would have a hard time telling you.”

“Some would be better suited for sale and disposition like the state owned enterprises could be better in private hands. Some could be utilized in an income earning capacity, like the government leasing 50 percent of their buildings, which could help to pay for their occupancy.”

Comments

KapunkleUp 1 year, 1 month ago

Translation: "Different dog, same fleas".

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JokeyJack 1 year, 1 month ago

Except that the COI is a lion, not a yellow or red dog. Of course Bahamians have free will and have the right to vote for another 40 years of suffering. They absolutely have the right to suffer. Fillet mignon steak might possibly upset the stomach of someone used to eating corned beef.

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tribanon 1 year, 1 month ago

Very disappointing. Bowe knows the effective tax rate on a Bahamian family of four earning $100,000 a year is well above 25% because of our very regressive tax structure and the hideous 'hidden' taxation built into everything our country must import through the robber barons that control the ports. He also knows the serious toll that government corruption combined with a failed public education system takes on our economy. Any effort to tax a greater percentage of GDP could have explosive implications if these matters are not properly addressed.

And Bowe should know that our GDP is over inflated as a result of the distortive way in which we currently calculate the economic contribution of the cruise ship industry to our economy. If that distortion alone were eliminated, he would quickly find that we already tax more than 25% of our GDP.

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OMG 1 year, 1 month ago

KapunkiUp is exactly right. Being in power be it PLP or FNM is a well paid job with perks so governments all over the world rarely focus on what should be done rather what they think the public will tolerate. Look at the PLP candidate for south Eleuthera promising a state of the art hospital,,( where will the money come from). The old chesnut about education and opportunities for students. ( why hire cubans not trained in the subject they are to teach or often with limited ability to speak english and no interest in being integrated with the community) or some new Principals who are so jnsecure they just dictate as opposed to consult staff. Then there is the old farming / business chesnut. It seems that one Eleuthera has done what no government has ever been able to achieve.

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birdiestrachan 1 year, 1 month ago

In these uncertain times of COVID 19 and a depressed economy. One thing is certain PM Minnis has no vision and will be unable to advance the Bahamas. Simple matters show this. 6 people at a funeral service they were the pallbearers. Alphabet shopping days. the Our Lucaya hotel. OBAN. calling an election at the height of the Hurricane service.

The PM lacks vision. but he seeks to always be the centre of attention it is all that matters to him.

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birdiestrachan 1 year, 1 month ago

There is also the question of TRUTH a man of his word. If I say I am going east and then go west I changed my mind.

What happened to a man whose word is his bond The increase in VAT that really hurt the poor most .

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DonAnthony 1 year, 1 month ago

We can thank Perry Christie and the PLP for vat.

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tribanon 1 year, 1 month ago

Notwithstanding his many promises of no tax increases, Minnis's very first order of business when he became PM in May 2017, and met the cupboard that Christie had left bare, was to increase the VAT rate by 60%, from 7.5% to 12%.

AND

Minnis's very first order of business should he remain PM after September 16, and meets the cupboard that he himself has now left bare, would be to increase the VAT rate from 12% to 20%.

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Emilio26 1 year, 1 month ago

At the end of the day taxes was going to up whether we liked it or not.

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