Chairman of the Chamber of Commerce Gowan Bowe said recently that the economy continues to experience stunted growth because the national revenue equals the national debt.
Recently, the Bahamas Quarterly Statistical Digest revealed the country’s national debt is at a whopping $7 billion as of late last year.
The report stated that the debt was at $6.8 billion in the first quarter of 2016, but rose to $7.042 billion in the final quarter of the year.
In an interview with the Bahama Journal, Mr. Bowe insisted that the real problem is not the $7 billion, but the fact that the country is “in over our heads.”
“We’re now crossing over or very close to crossing over that 70 percent of GDP, so what does that mean in lemans terms? It means we now have debt almost the same amount of the size of the Bahamian economy,” he said.
Mr. Bowe suggested the $7 billion, can lead the country into a double digit tax margin, being figured at 10 percent by early next year, but he also says raising taxes should not be one of the resolutions to decreasing the debt.
“If we tax there’s a danger of actually shrinking and not growing. So there’s an inverse relationship between economic growth and taxes so you can’t increase taxes and think you’ll grow, you’ll have to balance,” he said.
“There are many economies around the world including the Caribbean, so we’re not standing alone, but we need to focus on what are we planning to do to reverse it,” he insisted.
“The current administration has put forward a medium term consolidation plan that included increases in taxes by virtue of VAT implementation, it spoke about expenditure reform and reduction that the public doesn’t see in its clearer sense, and thirdly to grow the economy.”
The chamber’s chairman said growing the economy is easier said than done.
“Most importantly is what the political parties are saying not just telling me ‘I’ll grow the economy,’ but give me tangible ways in doing so, don’t tell me Ill reduce expenditure, tell me what your going to cut,” Mr. Bowe said.
VAT collections have totaled $ 1 billion since its implementation, but the deficit continues to grow without a consistent decline.
For the first half of 2016, the deficit totaled $314.2 million, but according to government records the increase in debt is largely attributed to hurricane expenditure over the last year.
