Opposition Leader Michael Pintard yesterday dismissed the government’s new budget as “another set of disappointing and inadequate policy plans that continue to demonstrate that this Davis administration is out of touch with the realities facing Bahamian families”.
“This administration refuses to come to the Bahamian people with concrete plans that will address the rampant spike in inflation, facilitate improved earnings for Bahamian families and bring our fiscal house back in order,” said Pintard after Prime Minister and Minister of Finance Philip Davis delivered the 2023/2024 Budget Communication in the House of Assembly.
“The Davis administration has added more than $1 billion in the national debt since taking office in September of 2021. They have done so with no Dorian, no COVID but are challenged to show the results produced as a result of their unwise spending.
“Today, we have a budget that is seeking to add hundreds of millions of dollars more on the national debt. They have put in no plan to rein in public spending, instead continuing on their path of greater and greater tax burdens to fuel their lavish spending and secret contracts and settlements.”
In the new budget, recurrent revenue is projected to be $3.316 billion and recurrent expenditure is projected to be $3.085 billion.
Davis said he is confident the revenue outturn at the end of the current fiscal year 2022/2023 will near $2.9 billion.
But Pitnard said, “Increased revenues have been outstripped by uncontrolled spending, however, which has resulted in increased deficits and increases in the national debt.
“This government is failing to lead our nation in a national conversation about careful priorities.”
As a result of net borrowing activities, central government net debt increased over the first nine months of the current fiscal year by $290.8 million to total $11.1 billion.
Pintard said that in the aftermath of Hurricane Dorian and the COVID-19 pandemic, Bahamians are being led by a government that is unwilling to curb spending.
His stinging criticisms came despite the fact that Davis announced that the deficit in the upcoming fiscal year is projected at $131.6 million – a $389.5 million decrease from the current year’s projected deficit.
“A key focus will be to generate more revenue for the public purse, without raising taxes,” the prime minister said.
“This means no increase in the VAT rate, and no increase in customs duties, excise duty, tax rates, and real property tax rates. We will instead increase revenue collection by improving tax compliance and enforcement.”
But Pintard said, “The government has promised no new taxes yet across multiple sectors, a whole range of fees have emerged.”
Davis said he is convinced the government’s fiscal policy, namely the reduction of value-added tax (VAT) from 12 percent to 10 percent, coupled with other reductions in customs duties and excise taxes, “contributed significantly to economic growth”.
“Other elements which contributed to growth included the digitalization of government services, especially the granting of concessions and legislative reforms. These measures have also facilitated the ease of conducting business in the country,” Davis said.
But Pitnard said there is no evidence that the reduction in VAT contributed to economic growth.
“The prime minister failed in his communication to provide any evidence of this fact nor did he cite any sources or provide any reference that could verify this outlandish claim,” he said.
“What we have seen, however, over the last year and a half are comments from international agencies that clearly talked about the policies of the previous FNM administration which set the country on a path to recovery.
“What we are seeing and we’re happy for it for the Bahamian people, in terms of the increase in revenue, is a world economy and a Bahamian economy that were substantially closed that are now open and businesses are roaring back.
“Of course, we do not want to celebrate certain dimensions of the revenue because the truth is a portion of the earnings come from inflationary pressures on the average Bahamian. And while we are grateful for revenue, we do know it is on the backs of many Bahamians, because we have a regressive, that is an inequitable tax system. Those who earn more are not paying their fair share. The average Bahamian is feeling the brunt of the inflationary pressures.”
While Davis said subsidies to state-owned enterprises have decreased, Pintard said promised reforms for these SOEs have yet to be delivered.
He noted, too, that despite the crisis facing the National Insurance Board, there was no mention by the prime minister of the way forward for NIB.