OFFICIAL Opposition Leader Philip Davis yesterday released projections for the upcoming 2018/2019 budget, predicting an increase in VAT, Customs duties and the introduction of new taxes.

Mr Davis said country’s economic reality will clash with the Minnis administration’s key public policy promises, which he deemed fiscally contradictory and highly irresponsible.

“It [the Budget] represents a real opportunity to present a growth agenda which this administration is sorely lacking. In its first year, the administration seem more fixated on making alarmist statements on the issues of fiscal management and accountability, which damaged the reputation of the country rather than improving the lives of Bahamians.”

He continued: “As a result, in the first year in office many of the gains made by the previous administration have evaporated. For example, there has been anaemic revenue growth notwithstanding the opening of Baha Mar. Revenue for the first nnine months is trending on par with actual revenue for the last fiscal year. This is disturbing as the last fiscal year’s revenue yield was decimated by Hurricane Matthew.

“With the phased opening of Baha Mar and the absence of major storms impacting New Providence, revenue yields should have been at least ten percent above the last fiscal year. A five percent increase in recurrent revenue would have allowed the Government to fully execute its capital budget.”

Mr Davis noted expenditure levels have not dropped in comparison with last year notwithstanding”widespread yet very selective terminations of contractual employees”.

While he said the Government has reduced capital expenditure to near historic lows as a percentage of GDP, Mr Davis argued it was essentially a deferment of expenditure and not a true budget saving, adding such a deferment would have a visible and negative impact on maintenance of infrastructure and the commencement of new projects.

He accused the FNM administration of sabotaging the government’s ability to mobilize resources through Public Private Partnerships (P3s) by “walking away” from agreements made by the former administration.

“This means that staff would have to remain in the condemned General Post Office building for an indefinite period; the Road Traffic Department’s emergency residence in the National Stadium has now become permanent; no new police facility for Harbour Island; and great uncertainty on whether the investors which are funding the construction of the new complex in Eight Mile Rock would ever be paid by this Administration,” Mr Davis said.

Promises were identified as: the elimination of VAT on a variety of goods and services at an undetermined cost; the introduction of economic empowerment zones in New Providence; reduce the deficit by over 50 percent in the upcoming fiscal year; provide free tuition at the University of The Bahamas; increase the use public private partnerships; and keep recurrent expenditure growth to less than three percent of the previous year’s level.

Mr Davis said: “It is safe to assume, given the current situation, that the public can expect any or all of the following: an increase in the VAT rate to offset the elimination of VAT on certain goods and services, the introduction of the economic empowerment zones in New Providence and to absorb the increase in the subvention to the University of The Bahamas.

“An increase in selective Customs and excise tariff rates as well as real property tax rates to account for the anaemic revenue growth of the past fiscal year.

“Introduction of new and additional taxes to fund the deferred capital expenditure and assist in the ambitious deficit reduction target of the draft Fiscal Responsibility Act.

“A capital budget which relies heavily on P3s but with significant implementation challenges in mobilizing Bahamian investors due to the Government’s indifference to the current P3 investors.

“No real increase in the recurrent allocation for any of the critical areas such as health, education and national security, so the manpower and skills deficit in national security, health and education would continue to widen.

“A freeze on public service increments or a reduction of public service employment levels. Public sector salary increments automatically upwardly adjust recurrent expenditure by about one percent per annum. Increments along with the increase in interest expenses and principle amortization would likely breach the three percent rule.

“Reduction in subvention to public corporations would certainly mean job losses.

“Reliance on the sale of assets to fund current expenditure.

He added: “For a Government without a real growth agenda, this is a bleak outcome and a recession inducing budget. However, it is unavoidable and although the Budget Communication would include the usual soaring oratory flourishes, behind those words would be a grim picture and it would grow grimmer as we traverse the fiscal path outlined by this Government.”