Deputy Prime Minister Peter Turnquest and Acting Financial Secretary Marlon Johnson yesterday sought to defend the government’s $240 million revenue shortfall, insisting that those projections are merely projections and the main thing to consider should be decreasing the deficit.
“One of the things I think is fundamental is that GDP growth projections are exactly that, they are projections,” said Turnquest, as he fielded questions during the annual budget press conference.
“Unless you have a crystal ball that’s a little better than my crystal ball, it’s very difficult to pinpoint the number.
“We make these projections based upon factors that we are aware of in the global economy, that are happening in our marketplace with our major sectors of our economy and based upon the plans and the investments that we are aware of.
“Any number of factors can affect and slow down that growth profile.
“…In The Bahamas, we have been benefitting from a very robust tourism sector and that is driving the growth for the most part, but one of the things I’m particularly proud of in this last GDP report is the fact that the growth that we’ve had has been private sector led…GDP growth is a factor of a number of things. It’s not only internal economic factors but also external economic factors and they all pay a role in achieving your results.
“The main thing though is to look at that bottom line and this year when you look at that deficit number coming in at our target, that means that we are doing a fair job in managing the fiscal affairs of this country.”
Similarly, Johnson maintained that with the job of fiscal management being to manage the deficit, the budgetary projections are simply that.
“I saw the headline about missing the revenue target and that is something important, but what really ultimately is important is making sure that you meet your fiscal goals with respect to deficit targets, your debt targets and the like because that really is the determinant of fiscal stability and fiscal success,” he said.
As he presented the 2019/2020 budget statement, Turnquest noted that revenue is estimated to come in at about $2.4 billion, some $238 million, or nine percent, lower than what was budgeted at the start of the fiscal year.
Turnquest noted that this was largely due to the new agreement with the gaming operators, the delayed implementation of the Revenue Enhancement Unit (REU) and the concessions granted to hotels and contractors in respect of the introduction of the higher rate of VAT.
Despite the revenue forecast shortfall, projected revenue increased by $373 million in the 2018/2019 fiscal year, led by an increase in VAT collected.
Turnquest said revenue collection should rebound and increase in the coming fiscal year.
Yesterday, he noted that given the challenges with collecting revenue, the government does intend to prosecute those who are not compliant with paying their taxes.
“For a number of years and for a number of reasons we have been relatively lax, some may say slack in the enforcement of the tax laws,” Turnquest said.
“And that has had its effect on overall results and the build up of all the arrears and all the debt that we have.
“Each of us as citizens have an obligation to pay our fair share.”
Turnquest added that while The Bahamas does not have an aggressive tax system, it’s usually the class of people who have more, who do not pay their taxes.
“Again this is not a punitive exercise, this is not a ‘gotcha’ exercise, this is very much a partnership where the government does its part and the citizens do their part and together we get the positive result from each of us following the rules that we anticipate are needed as a society,” he said.
Education: Vrije Universiteit Brussel (University of Brussels), MA in Mass Communications