Friday, 15 December 2017

DNA: The “Rich People’s” Budget

Let them eat cake or salmon! After examination of the budget communication by the new Minister for Finance, Peter Turnquest on behalf of the new FNM administration it is clearly a budget which favors the rich but does very little for the small man.

In their latest campaign promise bait and switch, the FNM has moved away from reducing duties on bread basket items, and instead decided to reduce duties on “much needed” goods and foods like salmon, cakes, x-ray machines and gym equipment.

The FNM has backed away from it’s pledge to reduce Value Added Tax on core items and services. Similarly they have also backed away from their inner-city tax initiative which was supposed to be a Hallmark of their government. That promise, however, was unsustainable as suggested by the IMF and other analysts prior to the election. That did not stop the FNM from saying it because they felt they could win by telling Bahamians anything!

We are left to wonder if Minister Turnquest’s declaration of “No New Taxes” was true and sincere. At the rate at which the FNM has backed away from central themes of their 2017 campaign, we are not prepared to believe that the FNM administration will not back away from their promise of “No New Taxes” or little else it has proposed to do!

The DNA notes The FNM pledges to borrow in excess of $720 million dollars in the current fiscal cycle. $400 million will be borrowed to cover the shortfall of the 2016/2017 budget deficit of a “staggering” $500 million dollars. Additionally, $320 million dollars is expected to be borrowed for the next budget year 2017/2018! Unbelievable! Unthinkable!

The DNA believes this is too much, too soon for the forecasted borrowing estimates for the 2017/2018 fiscal year. The conventional wisdom is that if you borrow that much in advance on the expectation of expenditure, without even presenting a budget slimming programme to go along with it, you will run the risk of spending that which you forecasted to borrow and we will be back to higher debt for the foreseeable future.

This magnitude of borrowing begs obvious questions which the Minister has yet to answer. They are:-

1. Where will the money come from to finance this debt?

2. Will new forms of taxation be introduced?

3. Will the VAT rate be increased?

4 Who is waiting to finance this debt?

5. What are the proposed terms upon which this debt will be borrowed?

These must be answered, brought to parliament and debated. The Bahamian people deserve to know.

The DNA also waits patiently for the approved estimates, because, while we appreciate more invoices and receipts will be uncovered, it is our expectation that the final deficit for the 2016/2017 budget will eclipse $500 million dollars. Further, we hope that the new Minister does not transfer the accounting cost of the 2016/2017’s debt into the new 2017/2018 fiscal year. We hope the current administration will not continue this process employed by the previous PLP administration in an attempt to hide the accounting cost.

The former administration has left the country finances in a deep financial hole that we will not be able dig ourselves out of any time soon, however it must never be forgotten that it was the FNM that added to the same financial mess when they were last in office. In fact, in June 2013, the current Prime Minister who at that time was leader of the Opposition, conceded that it was the FNM that left economy and its finances in a wheel chair. Now, the current Deputy Prime Minister and minister of finance has likened the state of the country’s finances, after 5 years of PLP governance, to a house with bare cupboards. The narrative between the FNM and PLP is ominously similar. Both of them have exploded the country’s debt.The clear take away from this budget is that the FNM has turned “The People’s Time” into “Their People’s Time”. This is a budget for the rich and not the small man, or the inner city.

In summary: This new FNM administration has backed away from many of its campaign promises and commitments just weeks after winning office, giving us a better understanding that they were unaware and incapable as an Opposition Party especially with its use of the Public Accounts Committee. They never addressed core issues nor gave real solutions aside from bashing the then sitting government. They are setting themselves up to be nothing more than a care-taker government, with no real plan for the Bahamian people and, the growth and development of this country!

The DNA still stands ready to hold this government’s feet to the fire and to the promises which they made to the Bahamian people!

Chris Mortimer
DNA Deputy Leader

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