Categorized | National News


Financial Secretary Marlon Johnson says  the  increase in Value Added Tax (VAT)  which became effective yesterday does not necessarily mean a  contraction of  the economy of   The Bahamas.  

Appearing on the Love 97 Radio Programme Jones and Company yesterday, Mr. Johnson recalled that back in 2015 when the Christie Administration first introduced VAT,  that the government witnessed a 1.1 per cent improvement in the economy on an annual basis. 

He also said that the government’s main object is to restore fiscal order. 

The government has gone on record in the past speaking of its plans to balance the budget over a period of three years. 

Mr. Johnson explained that there has been a significant ramp up in unknown debt, costing the country $360 million. 

While the country owes a considerable amount to foreign entities, the financial secretary said that the vast majority of the debt belongs to Bahamian public entities. 

He said, “we have a massive capital infrastructure deficit,  meaning that we just have been delaying the repair of roads;  we have about six or seven schools that are about past their use for life;  we have any number of docks that we need to repair;  airports we need to regenerate.”

He added, “we have a massive capital deficit that really is a cost that goes unbudgeted. So, yes we have been doing okay,  but we weren’t in a positive that where, to my view at least, we actually have the infrastructure to match our 2018 standard.”

Mr. Johnson also addressed small businesses expecting a cheque from the government. 

He said, “the cramp that it puts on these small businesses when a unfunded liability to them is substantial.”

He added, “The cramp that it puts on BPL when the government owes then $25 million is substantial, because it’s a cash flow constraint and they have to find the money to buy the oil and we the consumers now have to over that. The money that’s owed to NIB has a real real impact.  So at some point those chickens come home to roost and you have to actually start to pay them down.”  

The financial secretary also touched on the criticism coming from the country’s business community who  suggested that the government should have  consulted  them before proposing the 4.5 increase on VAT. 

He said, “I’ve been a part of budgets from 1991 to 2001 and again in 2018, and in all of my time, going back to ( former Minister of Finance)  Paul Adderley, I’ve never once from any budget seen  that the government consult anybody on tax increases.”

He acknowledged that fact that the increase in VAT was different because it was an introduction of a brand new tax which created opportunities for consultation in the past. 

He added, “We saw considerable tax increases in my first go around. Remember when I started cars were 35 per cent. They’re 65 per cent now. There were no business licenses I came into government, but there was a business license put on all businesses in The Bahamas  with zero consultation.”

“So you can make the argument that yes the government can consult or should consult, but that is truly a policy decision.”, He said

Mr. Johnson also suggests taking a serious look at diversifying the economy, rather than solely focusing on paying off the country’s debts. 

He suggested taking a look at the Blue Economy and the Digital Economy as models.

Written by Jones Bahamas

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