NASSAU, Bahamas – Prime Minister Phillip Davis on Wednesday presented a multi-billion dollar tax free budget to Parliament as the country begins to rebound from the impact of the coronavirus (COVCID-19) pandemic and now having to grapple with “great challenges and opportunities”, occasioned by a changing global environment.
Presenting his first fiscal package since his Progressive Liberal Party (PLP) was swept into power in September last year, Davis told legislators that ‘this is a time of great challenge for our country, but also a time of great opportunity.
“There is no doubt that the world’s problems from intensifying hurricanes to deadly viruses to energy shocks and supply chain interruptions have all washed up on our shores. The perils are real, but so is the promise of what we can become if we move forward together.
“This budget provides a foundation to strengthen our nation, to lift ourselves up, to face the future with strength and optimism. This budget provides support for the here and now and also charts the way forward for a brighter tomorrow,” Davis said.
He told legislators that in taking the country forward, he remains confident “that this budget does just that”.
According to Davis, the budget projects a significant “rebound in the Bahamian economy” and that total revenue is projected $US2 804.4 million, representing a 19.9 per cent increase over the last fiscal year “when the economy was in the early stages of an economic rebound of the COVID-19 pandemic
“It incorporates many of our revenue enhancing strategies and outcomes such as increasing real property tax collection and compliance and improved VAT (value added tax) performance based on the economic rebound and growth in other fees as a result of improved revenue administration”.
Davis told Parliament that during the fiscal year, VAT collection is estimated at US$1 411. 8 million, a 52.4 per cent increase over the previous 12 months.
“The increase is largely attributed to a rebound in economic activity, the economic stimulus associated with the reduction in VAT from 12 per cent to 10 per cent as well as the positive benefits of the removal of the COVID-19 Emergency Orders”.
He said real property tax revenue is also forecast to improve by 6.7 per cent to US$169.4 million even as it remained below the US$280 million in real property tax invoices issued annually.
He said enhancements in revenue administration are critical in further improving collections and that one “transformative policy is the agreement of banks to assist in the collection of real property tax from mortgage holders”.
He said regarding expenditure, his administration intends to spend US$3, 368.4 million with recurrent expenditure projected at US$2 997.2 million and capital expenditure estimated at US$371.1 million.
He said as a result of these operations, which incorporates total fiscal management principles, the fiscal deficit under the current budget is estimated at US$564.3 million.
“I wish to remind this Honourable House that this projected outturn does not include potential revenues from asset sales such as receipt from the sale of the Grand Lucayan hotel in Grand Bahama,” he said, reiterating that the fiscal package will allow for Bahamians to take “advantage of the many opportunities which we have been blessed and also to withstand and overcome the many challenges currently facing the world”.
The budget was delivered under the theme “The Way Forward: A Plan for Recovery and Progress”.
The government has submitted a proposal to the Bahamas Public Services Union (BPSU) to increase minimum wage in the public sector with incremental increases starting in July 2022 and Davis said that funding has been provided to increase the salaries of teachers and to pay a retention bonus to teachers and nurses.
He said funding for non-government organisations has been increased by 10 per cent across the board and that all property owned by religious organisations, trade unions, civic organisations and burial societies will be exempt from real property taxes.
The government said that 10 per cent of overall revenue collected in the Family Islands from property tax and road traffic fees will be allocated to the creation of a Family Island Development Trust Fund in the amount of US$200 million and that the fund will facilitate the government in making investment in Family Island infrastructure. (CMC)