The Tribune

TODAY is a landmark day for the Davis administration – its first full Budget presentation.

The PLP has of course now been in government for some months, but the moment when any government lays out its plans for spending and revenue raising always marks out the direction we are going.

There have been contrary claims ahead of this Budget – with some saying there will be new taxes, and some saying there will not. Among the latter category is Economic Affairs Minister Michael Halkitis, who has ruled out the possibility of increasing taxes.

Keep an eye on the small print, however. We already had this government campaigning on reducing VAT only to then snip off the breadbasket exemptions, therefore raising taxes on those items. That was not quite as advertised on the campaign trail.

And while Mr Halkitis has hinted at incentives for homeowners and relief in areas such as investment, green energy and so on, health insurers are pointing at the possible end of the ability to reclaim VAT on medical claim payouts. That may not look like a tax, but it certainly will feel like one when that missing income ends up going on insurance premiums.

As one source told Tribune Business yesterday, “It’s a consumer tax that falls back to the consumer. Whatever your claim is, you will only now get 90 percent of it. It’s going to drive up the cost of private healthcare by ten percent. There are more than 100,000 people with private health insurance. Some of them will be forced out and unable to afford it any more, or companies will look to reduce benefits to make it more affordable.”

If this turns out to be the case, then that is raising taxes in a more roundabout way.

That same source added: “You are increasing tax rates on the middle class. All it’s doing is taking the individual tax rate, which was last time said to be 34 percent, closer to 40 percent with these measures. These are a bunch of subtle taxes that are adding up.”

So when the Budget is delivered, remember the devil is in the details. Money out of your pocket, whichever way it goes, is still money out of your pocket.

There will also be talk of increased revenue from carbon credits. How does that work? Every nation has carbon credits. When a polluter nation blows through its allotment, it can buy credits from a nation such as ours, which does not pollute as much. So we can make money from it. It may not do much to actually help the environment, but we can use those funds to help compensate for the damage we suffer from someone else’s contribution to climate change. That’s what it should go towards – we’ll see if it does.

The important thing of course is that we all want to have a strong economy. We have suffered tremendously from, first, the impact of Hurricane Dorian, and then the pandemic. Mr Halkitis says that the tourism industry is very strong, and he does not want any increase in taxation to undermine that recovery. Nor should he.

There are many Bahamians who have not yet felt the full rebound of the economy. There are many who are still out of work or financially disadvantaged because of the hardships we have gone through.

A strong economy should help all Bahamians – that’s not always the case, but it should. And if this Budget can help towards that, that should be something we should all cheer.

Watch carefully, though. We certainly will be.