CHESTER COOPER RESPONDS TO THE BUDGET

PLP RESPONSE TO 2018/2019 BUDGET COMMUNICATION

CHESTER COOPER, PLP DEPUTY LEADER, EXUMAS AND RAGGED ISLAND MP, SHADOW MINISTER OF FINANCE

MAY 20, 2018

Today is a very Sad Day. The Government shamelessly announced an increase in VAT from 7.5% to 12%. A whopping 67%. This is an outrage.

The Minister of Finance showed the Bahamian people that he has no idea what he and his government are doing. This is a budget of pain and no gain. They come yet again to blame and have no shame for their one year of failure. Loss of jobs and more people accessing social services. Add to that they are raising taxes on the backs of the poor. People crying in Grand Bahama: to fix Grand Bahama. No good news here. Bad news all around. They have depressed the nation today.

The proposed raising of value added tax is not only treacherous but is a reckless and dangerous move on the part of the government.

We put no faith in their fiscal deficit recovery strategy. One hurricane can come along and blow a hole in that strategy. It is pie in the sky.

Imagine now how obtuse this government now seems, out of touch with reality. The banking system has failed Bahamians. The people in remote communities like South Andros and Acklins and Black Point have to depend on deposits in gaming houses to be able to get their money. Now it is going to cost them 5 per cent to put their own money on deposit. This is tax madness. It is unconscionable.

Let me emphatically state that the PLP does not support any increase in taxes in this budget exercise. We will vote against them!

The key to raising revenue is to grow the economy – something that the PLP has been shouting in the House of Assembly since the last, disastrous budget communication.

But more basic than that, it flies in the face of widespread agreement among experts that adding exemptions to value-added tax is the least efficient way to make VAT collection work.

This is not economics. This is politricks and obeah economics.

The Inter-American Development Bank, the International Monetary Fund, Standard and Poor’s, Moody’s, New Zealand VAT experts and the Chamber of Commerce’s consultants from Oxford all agreed that VAT should be implemented at its current rate with no exemptions.

What research has the government undertaken to determine that exemptions, despite the best advice from throughout the world, is the best course of action and not merely a political gimmick?

The truth is, it will make VAT collection more complex and potentially affect revenues beyond what the government expects it will miss out on from those exempted items.

The FNM is undoing progress on the most progressive tax reform in generations without understanding what it is it is doing.

This is the same FNM that voted against VAT, claiming it would inflict pain and stress on the middle class and the poor, called it double taxation. In opposition, the now prime minister said it would remove the hope of a better life. Now there is move afoot to throw what has worked successfully out of balance.

Also, clearly ill thought-out is the government’s Over-the-Hill initiative and its impact on VAT revenue and those who will be hurt most by it. This initiative will most likely increase tax non-compliance without really benefitting those who make their homes in those inner-city areas.

Business to business net costs are likely to increase – if they do not charge VAT, they cannot recover VAT. It is far from as straightforward as the government is making it out to be. It is clear to me that they do not understand how VAT works.

They talk facts and figures but have no idea of the injury they are doing to the real lives of people in this country. One year later, they are still studying and reviewing. When will they get on to governing?

He seeks to blame the PLP but here is what the PLP did: increased thousands of jobs, increased revenue, Bahamar and the Pointe.

All of the objectives of balanced budget would have been met by the PLP had it not been for the hurricanes.

This budget by the FNM is no “People’s Budget’ and is a betrayal of the trust reposed in the Minnis administration by the people of The Bahamas. The Government has fired people so now they brag about the wage bill being less, but what has this done for the people who no longer have jobs and the decline in the quality of government services. It has further choked the economy.

Just look at the state of our infrastructure. There has been marked decline in the public roads and in the maintenance of public areas.

This is the price of FNM governance. People suffer. Our life gets worse.

Grand Bahama remains unfixed. People are sleeping in cars over there with their families.

It is a shameless; a disingenuous tax grab that lacks compassion, but more importantly, the budget lacks any clear vision on how to run the country, much less the fiscal affairs of the government.

Let me correct the record: the revenue enhancement unit was not floundering under the PLP’s administration. The Minister of Finance, believing his party’s propaganda, dismantled the unit, sent the workers home and now that the revenues are down, he is looking for an excuse to reconstitute the unit.

While we recognize the Government has waived VAT on breadbasket items, we must be careful that we do not in the end cause the poor more hardship by doing what was done. All the advice which was obtained suggests that you think you are helping the poor and by the cost of administration being more expensive, you actually make it worse for the poor. In the end you have to make up the loss of revenue with higher taxes on other items. This is a shameful exercise of smoke and mirrors.

The changes in the tax structure is to attack small business men who are in the used car business, to the benefit of wealthy car dealers. The potential 350% increase in tax on gaming houses threatens the employment of 3,000 Bahamians.

The Government had to do something to prime the employment pump because of the number of cruel layoffs they have inflicted on the country, thus the four million dollars for recruiting university graduates.

The PLP will oppose these tax increases and vigorously defend the Bahamian people against an FNM whose self-interest and political survival have caused them to abandon any pretense of this being ‘The People’s Time.’

End