By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Outstanding tax arrears owed to the Government in three key revenue streams increased by more than $104m during the nine months to March 2025, it was revealed yesterday.

Data released with the 2025-2026 Budget revealed that combined VAT, real property tax and Business Licence arrears totalled $1.43bn during the one-time snapshot taken at that point, representing a 7.9 percent increase compared to the $1.325bn said to be outstanding from the previous 2023-2024 fiscal period as at June last year.

However, amid the seeming mountain of 'red ink', there were initial signs that the Department of Inland Revenue's real property tax crackdown - and use of its statutory 'power of sale' to auction off properties to recover debts from tax deadbeats - is having some success. Because the arrears for both commercial properties and foreign-owned vacant land - the initial auction targets - were down year-over-year.

Outstanding real property tax said to be owed on commercial properties declined by almost $19m over the nine-month period to March, falling from $360.324m in June 2024 to $341.331m, a drop of 5.3 percent. And sums due on foreign-owned vacant land fell more narrowly, by $2.75m or 1 percent, from $309.945m in June 2024 to $307.173m in March 2025.

While the reductions remain small, they nevertheless suggest incremental progress. However, real property tax arrears for residential property were said to have increased by 5 percent or almost $10m over the nine-month period, from $192.531m to $202.394m, while outstanding owner-occupied liabilities jumped from $190.107m at June 2024 to $208.549m this March, a 9.7 percent or near-$18.5m rise.

As for VAT arrears, those increased by 43.3 percent or more than $95m over the nine months to March to stand at $309.24m compared to $215.834m in June 2024. And outstanding Business Licence fees rose by some $4.5m during the same period, from $56.503m to $61.036m, although the latter figure - as well as many of the others - are likely to be reduced by collection efforts.

The March 2025 tax arrears figures, though, did not include the $357m that the Government is demanding from the Grand Bahama Port Authority (GBPA) to cover the cost of providing public services in Freeport over and above tax revenues generated by the city. That sum was included in the prior year's numbers, and the Government yesterday said it intends to bill the GBPA for another $75m next fiscal year.

"Reported values represent outstanding balances as of March 2025," the Government said. "Arrears are reported by fiscal year based on the period in which the tax liability originated. All outstanding balances are included starting one day past due. Amounts reported include principal plus applicable surcharges, fines, fees, penalties and interest."

Elsewhere, the 2025-2026 Budget revealed that $1.118bn, or almost one-third or one out of every $3 in the Government's recurrent spending over the 12 months to end-June next year will be allocated to paying interest on The Bahamas' national debt and subsidies to keep loss-making state-owned enterprises afloat.

Together, they account for a combined 32.5 percent of the Government's fixed-cost spending, with interest costs taking a 19.4 percent share at $668.045m and subsidies making up the balance at $450.585m or 13.1 percent.

Total subventions, or subsidies, to SOEs are set to increase by 11.7 percent or more than $57m year-over-year, compared to what was approved in the 2024-2025 Budget. The greatest increases are for the Public Hospitals Authority (PHA), whose taxpayer support is rising from $232.456m to $247.856m; Water & Sewerage Corporation development projects, which are jumping to $48m from $36m; and a $5m rise for the Bahamas Public Parks and Beaches Authority to $29m.

Some $343.781m in proposed guarantees for SOE financing are also before the Government. These include $75m to underwrite the PHA's repairs to the Princess Margaret Hospital (PMH) and Rand Memorial Hospital, plus an $80m guarantee for the Glass Window Bridge replacement and $76m to backstop a Bahamas Mortgage Corporation refinancing by issuing new bonds.