The Tribune

By LEANDRA ROLLE

Tribune Chief Reporter

lrolle@tribunemedia.net

FINANCE Minister Michael Halkitis defended the Davis administration’s push for pension reform yesterday, warning that public pension liabilities are projected to climb by $4.1bn by 2032 as the government faces pressure over tax arrears and its broader fiscal strategy.

Opening the budget debate, Mr Halkitis said pension and gratuity payments already accounted for nearly 6.2 percent of recurrent expenditure for the nine months ending March 2026.

The Davis administration has introduced a White Paper proposing a Contributory Public Sector Pension Plan. Under the proposal, employees would contribute at least three percent of their pensionable salary, while the government would contribute five percent.

The Bahamas Public Services Union has objected to parts of the proposal, particularly a provision that would require public servants with fewer than eight years of service to join a new pension plan.

However, Mr Halkitis argued that reform is necessary to keep retirement benefits sustainable while giving workers greater long-term security.

“While this reform will ease long-term fiscal pressure, its benefits go beyond the public balance sheet. A more sustainable pension structure frees resources for priorities that matter most to Bahamians, including healthcare, education, infrastructure, and essential public services,” he said.

His comments come amid continuing concern about government spending and a growing tax arrears bill.

A review of budget documents found that tax arrears owed to the government increased by $382m, or 26.7 percent, during the first nine months of the current fiscal year.

Addressing the issue, Mr Halkitis said tax arrears stem from several factors, including timing issues, delays between assessment, billing and payment, and communication breakdowns between taxpayers and relevant authorities.

“There are also cases where bills are not received on time, which contributes to late payments and the accumulation of arrears,” he said. “However, Madam Speaker, while we recognize these challenges, we are also taking decisive steps to address them.”

Mr Halkitis said the government’s response includes modernising tax administration through the One Tax Bahamas initiative and expanding the government’s digital tax portal.

“We are making it easier, faster, and more convenient for taxpayers to view their obligations and make payments,” he said. “This reduces the likelihood of missed deadlines and improves overall compliance.”

He said the government is also strengthening enforcement, including increased property tax collection efforts and auctions where necessary, as well as tighter oversight of VAT and business licence obligations.

“In cases where arrears persist without resolution, the government will take appropriate action to ensure compliance,” he said.

Mr Halkitis said the government is taking a balanced approach by making it easier for taxpayers to meet their obligations while holding non-compliant taxpayers accountable.

He also rejected concerns that the government may be underestimating global economic uncertainty, insisting the budget was built on conservative assumptions.

“This budget reflects prudence and discipline,” he said.

Addressing questions about the government’s ability to withstand a tourism downturn or other external shocks, Mr Halkitis said maintaining a budget surplus is helping build a financial buffer for periods of uncertainty.