Rick Lowe
Because a picture paints a thousand words I've attempted to look at this post a little differently with the use of a graph showing the results of public finances from 2003 through 2008.
We can see that, as revenue has consistently risen over the period, expenditures have increased even more.
Revenues have gone from $900 million to $1.4 billion.
Expenditures have increased from $1.1 billion to $1.6 billion.
So the annual deficit has increased an average $178 million per annum over the six years that we have data for.
However, on top of all this, the national debt ballooned from $2.4 billion to $3.2 billion, an increase of almost $800 million during the same period.
And as we now know in the two years since, 2009 and 2010, the national debt is now in the $4 billion range. Another $800 million increase in just two years!
See the graph below:
So what's the answer?
The Government tells us they must find ways to increase income by changing the tax structure to a Value Added Tax.
While this might have other positive impacts, like the possibility of reducing prices and hence, the cost of living, I respectfully suggest that any net benefit to government revenue will only be temporary because expenditures will soon outpace income, as the track record shows.
My suggestions would be for the government to:
1. Reduce expenditures
2. Collect taxes that are past due
3. Enforce applicable taxes
4. Charge market prices for government services (passports, birth certificates etc)
5. Sell off the public corporations (BEC, BTC, Water & Sewerage etc)'
What else can you think of?
Add Bahamasair to the list.
Start collecting the o/s Real Property Taxes
Add the Mortgage Corporation, and the Development Bank to the list, probably even BAIC, all are just money black-holes, and probably aren’t even really needed in the first place, except for of course providing a couple hundred civil servant jobs.
Don’t know what exactly what you mean by market prices for passport and birth certificates?
Over tax us, and as past realities globally will show,
the productive will leave.
Kinda blows their projections to hell.
Like taxing “numbers” do you really think they will collect real figures? Or will more Government credit accounts be opened, and open ended?
I am not an economist so I ask if there is anyone out there who can tell me when we are projected to hit the brick wall, the one that we can’t move – like printing more money?
Thanks all for commenting:
@ Larry – I’m sure $60 per passport does not cover the costs of producing it. If we had to pay the real costs plus a little profit, we would be screaming for Government to reduce the price and become more efficient/save costs. As it is now, the real cost is hidden in deficits and debt. Charging market prices for these services will awaken the public to the sham.
@ Dr. Sweeting – Like you, economics is a subject I thoroughly enjoy, but I am not an economist so I can’t answer your question. I think the most economics can do is track what has happened with the debt levels and money printing exercises when we “hit the wall.” I do believe hitting the wall is closer now than it has been though :0)
Here we go again..Increasing revenues means even larger government and a bigger civil service.. Bigger government means more wasteful spending.. Excessive spending leads to increased debt and even larger deficits as the country’s tax base is maxed out.. The country’s international credit rating comes under pressure and is eventually downgraded.. Debt service forces devaluation and financial destruction..
Is this the Bahamas, could be.. Is this the United States, could be again.. Try the former super power, the Soviet Union, and you may have gotten it right.. Perhaps there is some economic truth to be learned here.. But then governments never learn the lessons of economic experience.. They only promise what they can not fulfill.. And as for “we the people,” we shall just keep accepting the promises of hope and change that are just over the horizon.. You know that distance place where the sky meets the sea and truth becomes reality..
Has the Bahamas government ever ran a surplus??
I don’t know.
Apparently, during the better economic times as govt. revenue increased, govt. spending increased also, even more than the revenue.
I really don’t think with an election right around the corner, the govt. will take serious spending cuts, so tax increases, mainly customs are probably set to be increased, although they won’t be publicized. Either way, the future looks kinda bleak to me for the fiscal state of the country. I don’t think, it won’t be until the IMF is basically running the Bahamian govt. that serious spending cuts would be made.
Larry, we are beginning to see the light.. Prior to our independence the Bahamian economy was managed by a Monetary Board.. Fiscal prudence was the order of the day as the government budget had to be balanced, debt was short-term and deficits never existed.. Enter the new era of political independence.. The Monetary Board was abolished in favor of a Central Bank.. The politicians took control and started to spend the public’s money as if there was no tomorrow.. Money was printed and debt was issued through the Central Bank in order to fund the nation’s increasing deficit spending.. Financial prudence gave way to imprudence.. By the end of 2008, the budget deficit has grown since independence to over 3.2 billion dollars.. Not a very pleasant situation for a country of about 450,000 people..
Today one had to question whether independence leads to financial self-destruction.. In the United States irresponsible politicians over last 100 years have created massive government deficits which will never be paid off.. Could the Bahamas be right behind the mess to the West.. Lets hope not.. But the debt clock is ticking not only for the United States but the Bahamas as well.. Entitlement programs in both countries are in crisis and deficit spending is totally out of control.. These are times for politicians to take the corrective policies and measures that are necessary to save us from secular economic decline and destruction.. But as Larry has so clearly pointed out, this will never happen.. Political leadership, both in the United States and the Bahamas, will only react in total denial as spending goes unchecked and taxes continue to increase.. What a sorry state of affairs we find ourselves in.. Who knows what will really happen and what our financial destiny will bring forth..
Oh well perhaps on a more brighter note at least we don’t have to worry about global warming any more.. Sorry Al, the polar ice caps are back and polar bears are having a ball.. The Bahamas is not underwater yet, only the country’s economic and financial condition are drowning.. So be it..