Cabinet ministers back budget despite public reaction
Despite 76 percent of respondents in the latest Public Domain survey opposing the government’s 2018/2019 budget, several Cabinet ministers insist the government is doing the right thing.
“Sometimes in governance, you have to do what’s right, not what’s popular,” said Attorney General Carl Bethel, when asked his thoughts outside Cabinet.
“We’ve reached a stage in The Bahamas fiscally, in terms of where the government is, in terms of its obligations… and when you look at the traditional sources of revenue, they are not enough to cover these obligations that have been incurred by previous governments, including previous FNM governments.
“And, so, we have to do what is right for the Bahamian people.
“We have to do what is right to restore financial balance and sanity in budgeting in this country.”
During the budget communication, Deputy Prime Minister and Minister of Finance Peter Turnquest announced that value-added tax (VAT) will increase from 7.5 percent to 12 percent, effective July 1. He also announced that, as of August 1, VAT will be removed from all breadbasket items, except sugar, which will be removed from the breadbasket.
The increase in VAT is expected to bring in an additional $400 million in new revenue.
Public Domain conducted a telephone survey between June 2 and June 6, 2018 on the government’s budget.
Eight hundred respondents throughout The Bahamas were interviewed. The survey revealed that 73 percent of respondents oppose an increase in VAT.
“We think we’ve found the most painless way, even though it is painful… there is no question, this 12 percent VAT, this extra four and a half percent, we all have to pay that, including we who make the decision; it’s painful,” Bethel said.
“But no one can get rid of the kind of fiscal illness affecting this country without some degree of pain.
“And it’s better for all of us to shoulder our equal share of that pain, since we have all, over the decades, enjoyed the benefits of government spending based on deficit financing by borrowing; borrowing to do all of the things that we have demanded governments to.”
Sixty-two percent of those surveyed believe the budget is designed to benefit special interests within the FNM.
Sixteen percent said it is a budget like any other budget, and 15 percent said they did not know.
Bethel, however, noted yesterday that the raising of VAT will be to the benefit of all Bahamians, not just some.
Asked whether the government has considered the possible political fallout from raising taxes, Bethel said, “I don’t think it is ever a popular thing for any government to raise taxes.
“It is known to be a political negative, but I think at the end of the day, if we meet the fiscal targets, and the consolidation plan in the next three years pans out, hopefully according to our targets, the Bahamian people will see appreciable benefits, and it will give the government the flexibility to reduce even further instances of taxation on individuals and on particular classes of Bahamians.
“You will see the taxes that we have essentially brought in, the tax relief this year, is targeted for the poor and underprivileged.
“We will be able to intensify and perhaps even broaden and give even greater incentives; maybe these will be targeted toward middle class families in future budgets.
“In other words, if the government is able to correct the economic servitude of spending nearly $1 billion every year, just paying old debts, if we are able to correct that, it gives the government the freedom, as its own master, no longer an indentured servant to banks for a billion dollars a year.
“It gives the government more freedom to be more generous and more giving to Bahamian taxpayers and the middle classes.
“These are the goals toward which we aim. Yes, there is pain today, but it is pain that we all feel.”
Asked his thoughts on the opinion poll yesterday, Turnquest said, “If that’s what they say it is, that’s what they say it is. I don’t really have an opinion on it.”
Eighty-six percent of respondents believe the government should have engaged in public consultation prior to proposing this new budget.
Asked whether he thinks the government has properly communicated what it seeks to accomplish with this budget, Turnquest said, “We have done, I think, a very good job, in terms of trying to explain it in Parliament.
“Unfortunately, some people have not been able to hear that message, and we are going in each constituency, holding town meetings and clarifying, addressing the concerns Bahamians legitimately have about the budget; and we’ve had, quite frankly, very good responses.
“Once people are able to get the information directly, rather than from these fake news and all these WhatsApp things that are going around that are distorting the facts, once people have heard directly what the facts are, they can analyze it for themselves.
“We’ve had, quite frankly, overwhelming positive feedback. And that’s a fact. That ain’t fake news.”
Minister of Foreign Affairs Darren Henfield said he believes the government just has to prove that it is trustworthy with its taxation plan.
“I think Bahamians have a right to be concerned about any government that asks for an increase in taxation,” Henfield said.
“We think, as a government, we are doing the right thing.
“Bahamians are skeptical. They are untrusting of governments.
“They didn’t see what the former administration did with the increases that they got when they introduced VAT, and we are going to have to prove to them that we are worthy of their trust.”