Despite economic shrinkage from the COVID-19 financial crisis, Deputy Prime Minister and Minister of Finance Peter Turnquest maintained that the government will not raise taxes over the long term to recoup lost revenue, stating, “Nothing from nothing is still nothing.”
The Ministry of Finance prepared the 2020/21 budget on the assumption that the economy would be essentially shut down for the first quarter of the fiscal year, which ends September 31, expecting very little revenue and more expenditure outlays.
As a result, the government anticipates revenue to be down by 60 to 70 percent.
While some financial experts have said the government will have no choice but to raise taxes during the next fiscal year, Turnquest said he doesn’t see that as a viable option at the moment.
“Nothing from nothing is still nothing. Trying to increase taxes on an economy that is already weak and trying to recover, I don’t think is going to be terribly stimulative and we will probably end up with diminishing returns. So, I don’t see that,” he told Guardian Business.
Earlier this week, Turnquest said the Ministry of Finance is in the process of re-examining the budget and looking at contingency planning in the event the economy doesn’t fully open by the second quarter as had been projected.
Rather than trying to significantly recoup revenue, the ministry’s focus will be targeted more toward further reducing expenditure.
“What I do see is a continuation of our program to maximize the revenue that we already have on the books, to follow through with some of our other initiatives to create new revenue through user fees and other commercial-like service charges,” he said.
“I do see us reducing our costs for support of state-owned enterprises. I do see us redoing our cost structure overall to try and bring it more in line with our revenue and I do see us looking at our capital works requirements and looking for more public-private partnerships as a way of getting the work done without costing us too much on the financing side. So, I think this is going to have to be a multifaceted approach and we will try to do our best to contain costs as much as possible without having to ask the Bahamian public to take any more burden on their personal incomes.”