'No appetite' to avoid $100m in tax increases

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading businessman yesterday said the 2013-2014 Budget’s $100 million worth of tax increases would not be required if the Bahamas had the “appetite” to tackle the “deeply ingrained” culture of government dependency.

Describing the country as being in “a Catch-22 situation”, Franklyn Wilson told Tribune Business that the Bahamas had reached a point where few businesses wanted to expand without receiving some kind of ‘incentive’, and its citizens continued to demand ever more social programmes.

The Arawak Homes and Sunshine Holdings chairman said the 2012 election manifestos reflected this reality, as none of the major political parties had listed ‘reducing the size of government’ as an issue for fear of losing votes.

This, Mr Wilson said, had forced the Government to both focus solely on the revenue side of its Budget in a bid to close a $500 million-plus deficit, and return to its traditional tax targets (banks, the oil and auto companies) to increase income.

He reiterated previous statements to Tribune Business, namely that a 6 per cent cut to the Government’s planned $1.7 billion in 2013-2014 recurrent expenditure could generate an equivalent impact to the proposed tax increases, but there was “no appetite” - among policymakers or the electorate - to do so.

“The fact of the matter is the tax base of the country has been allowed to shrink over the last 15 years, for a period of time,” Mr Wilson told Tribune Business.

“I’m not assigning blame to any particular government or party, but the tax base has contracted, been reduced. This has reached the stage where any businessman, in return for him to do anything, begins with him going to the Government for an incentive.

“That’s been going on for a sufficiently long time that the tax paying base - the person saying: ‘I’ll do x, y, z on its merits’ without providing an incentive to the group of people doing that, is shrinking.

“Because of that, whenever the Government wants to increase revenues, the oil companies, the car companies, the banks..... there are only a few places they can go. They don’t have any option.”

The International Monetary Fund (IMF) recently suggested the Government was giving up $285 million per fiscal year in ‘tax breaks’ and other investment incentives, a sum equivalent to more than half the 2012-2013 projected fiscal deficit.

The Government has pledged to review its investment incentive framework in a bid to eliminate those breaks that are not generating any returns for the country.

Meanwhile, Mr Wilson described as “the real struggle” the Government’s attempts to commit to fiscal discipline despite declining revenues and shrinking tax bases on the one hand, and no spending cuts on the other.

“No one has found a way to shrink the Government,” he told Tribune Business. “If you look at the last election, no one was putting the case to shrink the Government. That was not an election issue.”

Noting that some commentators had even called for government spending to be increased, despite the precarious deficit situation and a national debt approaching $5.5 billion, Mr Wilson cited the May 2013 flooding as a case in point.

“If you look at the comments from the flooding, the recurring theme of the day was that the Government was not doing enough to help people and not doing it fast enough,” Mr Wilson said.

“Where’s the money coming from? In our country, the concept of the Government spending more and more money is so deeply ingrained that no political stakeholder wants to talk about reducing expenditure.

“It’s always about another programme we will introduce, another Ministry or Department we will introduce, another social initiative, more schools. It’s all about spending more money.”

Disclosing to Tribune Business that he understood the Government’s 44 revenue measures were intended to generate a net $100 million in increased taxes, Mr Wilson said the same impact could be achieved by slashing recurrent spending by 6 per cent.

“But I hear no one talking about if we could squeeze out around 6 per cent, there’d be no need for new taxes,” he added.

“There’s no appetite for that in or out of Parliament. Those are the realities.”

Comments

TalRussell says...

Comrade Frankie, leave the poor to be. First, lets rid the cash strapped public treasury from corporate collusion.

Posted 14 June 2013, 3:52 p.m. Suggest removal

Bahamianpride says...

TalRussell I could not agree more.... It is hypocritical for many Bahamian Business people to pick on the poor and complain about the size of Government when Government is in Collusion with business men like him to set policies that create monopolies like Arawak homes and inflat prices.. They could not aquire the amount of land and free reign without help from the Government and its politicians.. Unfortunately we cannot see these back door deals, or bribes.. Greed and the failure to invest in the Greater good of society has created our current problems...

Posted 15 June 2013, 3:52 p.m. Suggest removal

TalRussell says...

The poor native has little to smile about these days. If the banks are even picky about who they lend money to living on Eastern Road, forget about the borrower catching the jitney from over the hill to apply for a loan?
All they did was change them skin colour. Who knows maybe one day there will be an awakening? Seems like the only time the gold and yellow shirts administrations practice they Christianity, is when they're quick to answer the biblical question "Will Bahamaland's Poor Always be With Us?"
Be you black from over the hill or white from Centerville, does it really makes a difference whether it's a white or black native behind the desk, telling you that there is no loans money here at this bank for you. Sorry.

Bob Marley knew their habits well.

http://tribune242.com/users/photos/2013…

Posted 16 June 2013, 11:16 a.m. Suggest removal

Bahamianpride says...

It does not matter whether it's FMN or PLP...They have designed three classes of people in the Bahamas.. The Elite Ruling class like Mr. Wilson, Politicians, Judges,Rich Foreigners, Religious Leaders like Miles Munroe.. They are heavily connected look out for themself mostly, there family, there Cronnies... The working Poor, Teachers, Policeman, laborers, non management employee's. This group is heavily Leveraged and scrapping to get by with high prices for for food, housing, goods and services and low wages, (Except BEC). This is because of high stamp tax and a lack of Competition in business to force lower prices and competitive interest rates. Then there is the Dirt Poor, Unemployed or Under employed. The totally forgotten people and a large segment of the population. We all know what happens when a large segment of the population gets forgotten. It creates the Breeding grounds for Crime and Dysfuction..

Posted 16 June 2013, 3:33 p.m. Suggest removal

akbar says...

These so called businessmen have been sucking on the teats of politician for all these years now they have the nerve to tell people about government dependency. Now the teats are dry due to their ravenous appetites so they want to push the rest of us off to the wolves of the world. It is time for a social revolution in this country and Bahamians need to stop talking and strategize and organize and take to the streets. Five years is now to long to rid ourselves of these blood sucking vampires. How much more can the people take.

Posted 16 June 2013, 5:02 p.m. Suggest removal

proudloudandfnm says...

Meanwhile Frankie's geting paid to sit on a committee to buy back BTC, A mission that simply cannot happen yet he takes the pay. And his party is talking about paying Finalyson's staff or buying Finlayson's broke dwon warehosue for 10 million. Meanwhile his government is hiring stalwarts to do nothing but get a check.

The hypocrisy is astounding....

Posted 17 June 2013, 12:17 p.m. Suggest removal

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