By TANYA SMITH-CARTWRIGHT
tsmith-cartwright@tribunemedia.net
A TOP banker believes the government should put politics aside and make some unpopular decisions in the upcoming budget, saying the country is in a “precarious” position.
Gowon Bowe, Group CEO for Fidelity Bank & Trust, said a candid conversation on taxation needs to be had—with a view to increasing existing taxes or introducing new ones – but only on those citizens who can afford it.
“We are in a very precarious situation,” Mr Bowe told The Tribune. “We have to be in a position where we are making very difficult decisions that are going to be unpopular. The challenge is going into an election year, whether it is early or the regularly scheduled, whether or not the current administration will take the view that it will do as a fiduciary agent the best thing or it will be swayed by its political desires to continue in its current administration.
“When we move forward one year and we look at this time, the government’s precarious position I refer to is saying that ‘we do not want to push the debt levels to that point where we are only working to pay debt.’ In Bahamian vernacular it means my pay cheque is all going to pay previously spent money. That’s what debt represents, money that we have already spent.
“This year around, my position would be that the government has to be very deliberate that it is not spending on things that do not have long-term utility. What I mean by that is we need economic expansion and the most advanced territories like the US, Europe, Germany and the UK their government expenditure now is with the objective of stimulus. ‘How do I get economic activity to increase?’”
Earlier this month, the Ministry of Finance reported that spending to support social assistance programmes caused the fiscal deficit to rise to $878.2 million in the first nine months of the current fiscal year. This is up from $251.3 million during the same period in the previous year.
Since July 2020, the Minnis administration has borrowed $2.3 billion, a fiscal snapshot released by the ministry noted.
On the issue of social benefits doled out during the COVID-19 pandemic, Mr Bowe said Bahamians have already paid for the funding of these schemes through taxation.
“When I say that it comes down to in reality the government does not give back to the citizens what it does not take from the citizens,” Mr Bowe said. “In the last year there has been a lot of touting about the benefits that are being provided by the government. If we really take away all of the pomp and pageantry the government has only really given money back to citizens that it would have taxed before.
“Secondly, it has actually borrowed money in order to give benefits so it has left a debt for the same citizens. I think they need to do away with political rhetoric of what the government has done. In reality what the government has simply done is make a choice on behalf of the Bahamian people to redistribute its revenues that it collected from them, back to them directly as opposed to through government services economic expansion.
“It is almost an ‘Indian give’ in reality as they are giving certain incentives by way of tax breaks and other government subvention, but with the expectation that there is a return. I think that is going to be most important in this budget. That when we look at our expenditure, everything can be seen as investment in the future.”
On the issue of taxation, he said: “On the revenue front I think we have to (be) candid, in that we are already suffering from significant reductions in revenue and we are either going to have to look at increasing existing taxation or introducing new taxation that is not meant to strangle, but is meant to target those who can afford it.
“We’ve had a regressive tax system and we continue to have it based on consumption where you are not paying based on your ability to pay, but instead by just existing.
“The government is now going to have to look at its tax initiatives being directed in areas where it is most going to be impactful to those who have the capacity to pay. This is going to get political lobbying. They are going to have to shun that because they can’t increase it on those who are already in a depressed state. Trying to tax yourself out of a recession is like standing in a bucket and trying to lift yourself out.”
Mr Bowe also chided Bahamian governments for not looking beyond politics, saying that they should look at long-term planning. He said a national plan is what is sorely needed for successful outcomes.
“There is too much focus on social benefits being provided and we need to now have a mindset on how to teach a man to fish as opposed to giving him a fish,” he said. “We need to start looking beyond election cycles and we need the National Development Plan (implemented). That’s always my cry because that was looking out 25 years and beyond.
“In reality when you start planning that far in the future what you start doing is incremental steps and then you build. When you usually have a short horizon of what to do, you usually get thrown off course because you are not building towards something bigger.”
Comments
John 2 years, 11 months ago
Obviously this man is suffering from Corona to his brain. How can he even think of wanting the government to increase taxes or introduce new ones in the middle of a world pandemic? Doesn’t this man realize that practically everyone was affected by the Covid-19 pandemic, whether it was Natural or man-made. The sensible thing would be for government to effect a rapidly a recovery as possible and allow those businesses that suffered and also find themselves in an unfavorable financial situation to, at least Uniate recovery. Then government can seek to raise taxes. If government was to levy taxes on businesses, then they have no choice but to pass the increases on to the consumer. And, in most situations the consumer will be the persons least likely to afford them.
observer2 2 years, 11 months ago
....he is pure status quo...don't rock the boat, borrow, tax and spend.
Dawes 2 years, 11 months ago
Yes we have a regressive taxation system , however why only ever talk about increasing taxes?
observer2 2 years, 11 months ago
....because they don't want to talk about cutting spending, transparency, government waste, corruption, inefficient government etc etc.
....much easier just to cry poor mouth, borrow $2.3 billion last year and now ask for more taxes and say that the wealthy can pay more
SipPis 2 years, 11 months ago
I read this twice and still don't understand this man's point. Maybe he should become a politician.
observer2 2 years, 11 months ago
....he is, he is still young, once completed at Fidelity I am sure he will move onto Governor of the Central Bank or Minister of Finance in either administration.
Increasing taxes when 100,000 bahamians are in food lines and most hotels are closed and covid variants are raging is crazy.
increase taxes now and the rich will further close what few businesses they still have open.
tribanon 2 years, 11 months ago
Putting Mr. Bowe's usual loquaciousness aside, the article itself is extremely poorly written....literally incoherent in many places.
bogart 2 years, 11 months ago
..."childed Bahamian governments for not looking beyond politics...they should look at long term planning..." 25 years ???
Well, dat's a big ting when there have not been able to have govts in more than 5 year political party plan for power 5 term alternating . And when previously failed one takes office dey hav to untangle traps, white elephants, an unfeasible hospitals on top of hill to first grade down hill, bogging them down...Contracts rentals wid no exit to cancel unless exhorbitant money costs,, ...they wastefully close, sidetrack, and/or discontinue excellent programs wid impetus from previous govt,..... try to restart programs now run down an dormant previously when in power.... continued new mismanagement imputting their own political appointed layer of cronies in senior decision making an so ridiculus dat one set of cronies even know the previous set of cronies like two sides of same coin, ...limited lack of investigations buying mansions leaving dem to rot at expense to refurbish, ....forceful money injections into govt agencies without accountability and noone guilty,... and hot air blown when in Opposition side etcetc. and expectant Opposition salvitating dribbling and expecting another govt term.
Good views Mr. Bowe on your long term national plan and keep on wid more views.
tribanon 2 years, 11 months ago
I've said it time and time again.....YOU SHOULD NEVER EVER SEEK TO FEED NEW SIGNIFICANT TAXES OF ANY KIND TO A HIGHLY CORRUPT SYSTEM OF GOVERNMENT.
DOING SO ONLY REWARDS ONLY THOSE RESPONSIBLE FOR THE FAILED SYSTEM TO BEGIN WITH, SPECIFICALLY THE CORRUPT FEW THAT THRIVE THE MOST WITHIN IT.
Just take a good hard look at the slate of candidates that has been put forward by the FNM party and the slate of candidates that has been put forward by the PLP party for the soon to be called national general election. Would you really want to feed (entrust) either slate with significant new taxes?
WHAT WE REALLY NEED FIRST AND FOREMOST IS SERIOUS, MEANINGFUL AND SUSTAINED GOVERNMENT REFORM THROUGHOUT ALL LEVELS OF GOVERMENT, which I would submit only a winning slate of new independent candidates could ever deliver. And if the electorate doesn't see fit to deliver on that at the polls, then we should probably be happy with the looming full blown financial crisis that will result in foreign organizations and agencies like the IMF taking full control of our nation's financial affairs and economic policies.
TimesUp 2 years, 11 months ago
Perhaps start by taxing the government employees who were paid to stay at home during the whole pandemic while the private sector sat at home wondering how they would afford to pay their bills.
tribanon 2 years, 11 months ago
The enormous size of our grossly over-bloated public service sector already has a most serious choke hold on our nation's finances and economy. And successive corrupt and incompetent FNM and PLP administrations alike, especially the current one, have continued to exponentially grow the public sector headcount by thousands annually. And this is mainly because of their failed leadership and obvious inability to introduce the right kinds of economic policies that would grow the domestically owned (not foreign owned) portion of our private sector. Mr. Bowe would probably be the first to admit that a good portion of our public service sector is now nothing but a most costly and unproductive social welfare scheme. A most serious drag on our economy to say the least. Bluntly put, the public service sector ship has been allowed to take on too much water and is now on the verge of sinking all of us.
bogart 2 years, 11 months ago
@tribanon. The public service shop got this way with the political parties from their political election campaigns with political candidates in seems talks with their supporters to be rewarded with govt employment by the winning political party in govt.
No one as a workrr or political campaigner should be employed for govt vacancies based of greater political affiliations than ability to fill genuine authentic govt dept vacancies, based on qualifications and abilities to best fill the job.
Campaigners with inducements, encouragements or rewards of govt salaried jobs during or related to elections campaigning for votes, should NOT be rewarded with these seems govt artifical jobs by sacrifices/expenses of citizens by govt, then govt thereafter not having enough hospital beds, employment of seems continuous shortages of nurses etcetc, or, of growing of the private sector.
bcitizen 2 years, 11 months ago
It is time to have a candid discussion about the bloated civil service, government waste, and bureaucracy before we feed more money into the monster.
observer2 2 years, 11 months ago
....a sure way to loose an election, not even the PLP is touching this topic
tribanon 2 years, 11 months ago
That's precisely why it's so important for the electorate to support a slate of new independent candidates in the soon to be called national general election. A vote for the FNM or PLP in this next election would really be a vote for the financial collapse of our nation. And once that happens the Communist Chinese Party and/or foreign organizations and agencies like the IMF would take full control of our nation's financial affairs and economic policies.
DonAnthony 2 years, 11 months ago
No one hates taxes and big government more than me but the reality is that we are under taxed in the Bahamas. We collect around 20% of GDP in taxes, lower than most of our Caribbean counterparts and certainly lower than most developed nations. Problem is that we want first world services (welfare and benefits) but only pay third world taxes. Yes taxes need to be increased but only in a progressive way on the wealthiest in our society. Easiest way is to drastically increase and finally enforce property taxes on very high end real estate. We also should immediately introduce a low corporate tax that is based on profits and not revenue, with highest tax levels on our most profitable companies. Finally, we need to make serious decisions regarding heavily subsidized government corporations. Bahamasair and ZNS along with other entities need to be privatized to reduce the constant drain on taxpayers.
tribanon 2 years, 11 months ago
You're looking at a rather meaningless statistic. If you adjust our total GDP for the foreign component repatriated (taken out of our country) by foreign investors, leaving only the domestic component that really matters, you would quickly appreciate that the overall effective tax rate for many Bahamians is much higher than you presently think and our government would care to admit.
Proguing 2 years, 11 months ago
Increasing taxes in the middle of a recession is just about the worst decision one can make. This will kill any potential recovery. Any first-year economics student knows that.
The problem of the Bahamas is not "regressive taxation", but government overspending. For example, in OECD countries, the average public sector employment rate is 21.3%. In the Bahamas it’s 33.7%.
https://en.wikipedia.org/wiki/List_of...">https://en.wikipedia.org/wiki/List_of...
birdiestrachan 2 years, 11 months ago
Mr>Bowe is correct. Social benefits doled out during COVID 19. Bahamians had already paid for these benefits. but they pat themselves on the back and try to fool some people.
Check the high rent paid for the governor and other high rentals. check the post office deal and Our Lucaya sale and severence pay. The GB airport severance pay. never mind the $l.00 receipts. . is the Government house repairs complete.
The creation of consultants and new posts
birdiestrachan 2 years, 11 months ago
Never mind the money paid to Civil servants in some cases it is very little
Look more at the consultants and the new post created.
$9000 per month for rent. how many civil servants can that money pay.?
Whatever little money low-income people make goes back into the economy. .
ThisIsOurs 2 years, 11 months ago
the need to be tough or not, only the rich can afford more taxes. So start there, increase taxes on businesses boasting of making huge profits in the pandemic. They have the margin to assist
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