by Adrian Gibson
First appeared in The Tribune under the byline, Young Man's View here…
Today, is my first column back after a brief sabbatical and one notes that so much has transpired over that time. As I get back into the flow of things, I intend to assess a few of the issues that jump out at me and continue to do so as usual.
Let me begin by congratulating the Ministry of Sports and all the sporting bodies and persons intricately involved in the recent IAAF World Relay Games. The games were well-organized and were much, much better than the previously botched CARIFTA Games. Notably, there can be some improvement in the commentating, but I think that Ricardo Lightbourne demonstrated that he is the best sports caster in the Bahamas.
On another note, the recent announcement of the budget for the fiscal period 2014-2015 leaves much to be desired as it is long on talk and generalizations and seemingly illustrative of the government’s lack of fiscal discipline. Whilst I would not wish to be overly cynical, the fact is that the budget—on the face of it—does not restrain expenditure, contrary to the pronouncements of PM Perry Christie. Frankly, the PM’s pronouncements of a so-called enhancement of revenue administration and the securing of new sources of revenue have to be better explained to the Bahamian people. How will the government enhance revenue collection, where there are leakages and corruption relative to custom duties collections and shortfalls and theft relative to the collection of fees in countless other government agencies? How will the government collect Value Added Taxes and thwart some of the issues we now face? What will be so different?
It is generally understood that we are at a fiscal crossroads that demand that a belt tightening must be done by all. Frankly, this budgetary exercise would have been a wonderful opportunity for this government to reset our fiscal culture in a memorable, substantial way. However, it appears that the government has overseen the drafting and promulgation of an unclear budget where we see increasing expenditure from 2013 to 2014. Indeed, there are several areas where the public could have joined with the government in expressing and arriving at a national approach to our fiscal affairs.
There are quite a number of Bahamians who have dismissed this budget as nothing more than mere smoke and mirrors. What’s more, the decision to eliminate the itemized personal emoluments schedule for each ministry is quite noticeable and notably this has always been included in consecutive budgets—for example, instead of stating the specific numbers, a single lump sum is reflected which always for all manner of subterfuge and slippery ruses. In this case, for example, we would not know how much Jerry Roker is paid, what would the amount of his yearly increments or how many Jerry Rokers are actually employed in such an entity. Certainly, the budget lacks details and this is but one example of that.
Indeed, there are gray areas in the budget, with increases relative to foreign consulates of some 200 per cent and, though we are anticipating an increase in poverty, why was the social services safety net not increased beyond the nominal amount that has been allocated. One notes that there has been no increases in government subsidies to the Crisis Centre, the All Saints Camp, the National Parenting Centre, the Bureau of Women’s Affairs and several other social programmes, which feed and clothe the old and infirmed, the poor, persons with illnesses and so on. In the Department of Social Services, grants to charitable organizations saw a measly increase of $15,000—let’s keep in mind that most charitable organizations will receive no increase in their subventions. Frankly, if one was to look under head 43 of the “Estimates of expenditure on revenue account 2014/2015”, one would see that the Ministry of Social Services revised a meagre increase of $349,070 and this is in the face of the government’s own estimates that the cost of living will increase by some four per cent with the implementation of VAT in January 2015.
In the context of 40,000 people living below the poverty line—and in contemplation of the onset of VAT—I think that the social services allocations is disgraceful and could lead one to think that the government has no love for the poor and downtrodden. While I believe the onset of VAT will increase the cost of living to much more than four percent, the government must know that a four per cent increase in the cost of living is significant and could literally wipe out people’s disposable income.
In reviewing the budget, it is also clear that there has been an increase in public debt servicing in this budget, moving from $205 million spent in 2012 to $229 million in 2013 to more than $259 million in this fiscal period—2014 to 2015. The announced $259 million is more than the budget allocation for the Ministry of Health and the Ministry of Education, which annually get the lion’s share of the government’s budgetary allocations.
So, why didn’t the government hold the line, keeping recurrent expenditure to 2013 levels? Where is the fiscal responsibility?
I am passionate about education and I firmly believe that education is the great equalizer. A greater investment is needed in education and the government has seemingly not fulfilled its promise to double its investment in education as that is not reflected by this budget. Quite honestly, there has been a reduction in the subvention to the College of the Bahamas and Bahamas Technical and Vocational Institute. In the case of COB, there has been a decrease of $3.22 million and BTVI has seen a reduction in its subsidy of some $1 million dollars.
The government’s projected deficit—assuming that collections stay the same and relying upon the presumed efficiency in collection VAT—stands at $286 million. The question is, will the monies be collected? Considering our history with tax collection, I’m not beaming with confidence that it would be!
Amazingly, in three budgetary cycles, the government has borrowed $1.6 billion dollars, i.e. $550 million in 2012, $483 million in 2013 and $343 million (proposed) in 2014), in addition to the $232 million that was borrowed to finance the new Defence Force vessels. Without doubt, this is representative of an expansionary fiscal approach that has seen the greatest increase in borrowing in Bahamian history. The fact is that the debt to GDP ratio—even with VAT and the monies gained from legalizing the numbers business—would only expand unless we cut down on our excessive borrowing habits and exorbitant expenditures.
What I want to know is how much money in this budget is being spent on cronies, Urban Renewal and its unaudited expenditures and other questionable political jaunts and freebies! If the private sector is going to be pummelled into paying more taxes because the government needs more revenue, how much of that revenue is being spent on the most vulnerable among us? Surely, it can’t just be the extra $349,070 allocated as an “increase” to the Ministry of Social Services budget? Say it ain’t so!
And, why is VAT being introduced at 7.5 per cent but there is no corresponding decreases in the rates of customs duties? How is the middle class and poor people supposed to survive in this country with this runaway, double taxation and a proposed increase in National Insurance contributions to fund National Health Insurance?
