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Caution urged on new tax to fund NHI

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Gowon Bowe

By NICO SCAVELLA

Tribune Staff Reporter

nscavella@tribunemedia.net

BAHAMAS Chamber of Commerce and Employer’s Confederation Chairman Gowon Bowe yesterday warned the government to “be cautious” about implementing a tax to fund National Health Insurance, claiming that the country’s “meagre” one per cent of economic growth could be compromised as a result.

Mr Bowe suggested that implementing a new tax to fund NHI while the Bahamian economy is still “teetering on one per cent or one and a half per cent of growth” would likely result in a further shrinking of economic productivity.

Warning that there is no “bottomless pit that we can draw monies out of,” Mr Bowe suggested that a “mature” approach be taken by government officials regarding a potential NHI tax, and that the government only seek to go as “fast as our coffers allow us to do so.”

On Monday, during his mid-year budget communication, Prime Minister Perry Christie said the Ministry of Finance and the International Monetary Fund estimated that the Bahamian economy grew at just over one per cent in 2015 as compared to the projected 2.3 per cent in the May 2015 budget communication.

However, Mr Christie said his ministry and the IMF forecast growth in the economy between 1.5 per cent to just over two per cent for this year and the next.

Nonetheless, it has been suggested that in order to turn the country’s economic fortunes around, the economy needs to grow by at least five per cent.

To date, the government has not given any clear details about how NHI will be funded once implemented. Mr Christie said late last year that the government would not consider a tax to fund the scheme until after the start of the 2016/2017 fiscal year.

However, officials have said that if a new tax is introduced contributions will be mandatory for everyone.

“Firstly, any tax on an economy depresses economic growth,” Mr Bowe said yesterday. “That’s not debatable. In reality when you pull funds out of the private sector or the consuming public’s profits, that is actually a shrinking of economic productivity. So from that perspective, we have to be very mindful that if we are still only teetering on one per cent or one and a half per cent of growth, we have to be very cautious that we know what exactly is going to be pulled out of the pockets in order to provide certain benefits. So from that perspective we have to be mindful of economic growth.

He added: “I said recently, it was Sir Winston Churchill that said trying to tax your way out of a bad situation is like standing in a bucket and trying to lift yourself up by the handle, that you’re actually weighing down the very vehicle that you need in order to grow. And if I use the corollary, we have to be very careful on the taxes that we impose on Bahamian businesses, because these are the very economic engines that are required in order to drive this Bahamian car forward.”

Mr Bowe said that a major hurdle in the debate over NHI is not yet knowing the actual cost of the programme, as well as the uncertainty of how that cost will be absorbed by Bahamians, particularly the business community.

“There is no bottomless pit that we can draw monies out of; there is only so much that can be done with the limited resources that are available,” he said. “So until the economy starts to bolster and starts to be at higher levels where a rising tide lifts all ships, it becomes a very serious situation in terms of understanding when we can absorb these costs, and understanding the interrelations between employment, costs and benefits provided.

“…And so I would expect that there is maturity and what I would call timeliness, from the perspective of we will only go so fast as our coffers allow us to do so. And so that means we need to spend more time and resources and determine how much it’s going to cost and when, we need to look within our budget constraints and say what we can we allocate, and if we have to reallocate resources we do so in a steady state, and that we actually move towards a commendable initiative but in a very reasoned and planned out manner.”

NHI will be phased in over a five-year period, officials have said. In December, NHI Project Manager Dr Delon Brennen announced that the first year of primary healthcare services under NHI would cost $100m.

Primary healthcare was expected to come on stream in April of this year. However, Minister of Health Dr Perry Gomez has said that a delay in that phase is “likely.” When asked about this, Prime Minister Perry Christie recently said he did not want to speak about timelines, adding that his administration’s main focus is on “getting it right” with NHI.

Comments

cmiller 8 years, 4 months ago

They have to remember too that the Bahamian population is not a bottomless pit that they can keep dragging taxes out of to fund their bungling.

The only way they can fund this, is by dragging it out of our salaries like they do with NIB.

Honestman 8 years, 4 months ago

As the old saying goes: "You can't get blood out of a stone". It won't stop these idiots from trying however.

Well_mudda_take_sic 8 years, 4 months ago

Re-post: The only equation Bowe seems to understand and appreciate as a myopic accountant is that assets minus liabilities equals owners' equity. His education obviously did not extend to learning that a corrupt government plus more taxes equals greater deficits and increased national debt. Even now, after having been an ardent supporter of the implementation of VAT and watching how our VAT dollars have been squandered by the corrupt Christie-led PLP government, Bowe still doesn't get it!

Reality_Check 8 years, 4 months ago

To Well_mudda_take_sic: You're absolutely right about this. The more tax dollars fed to a corrupt government, the greater its propensity to borrow and the more likely lenders (like the World Bank, IDB, IMF, etc.) will seek to have the corrupt government over-extend itself through the taking on of additional loans that do not serve the borrowing country's interests. This is a simple fact! The developed countries long ago realized that the best way to acquire or control the natural resources of third world countries on the cheap is to foster the corruption of their governments and then saddle their citizenry with excessive debt through the international lending agencies controlled by the developed countries.

i_land_boy 8 years, 4 months ago

that unibrow tho. reminds me of the handlebars on my old royal enfield ten speed back in the day.

OMG 8 years, 4 months ago

A country run by men in denial who couldn't get drunk at a free bar. Look at the lies that the Pm has told the country regarding the opening of Baha Mar week after week when any person with three brain cells knows its a long time before it will or may open.

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