The Free National Movement Leader Hon Michael C. Pintard issues the following statement on the government’s May 2022 Monthly Budget Report.
The Opposition notes the publication of the May 2022 Monthly Budget Report. We remind the government that these reports are due one month following the end of reporting month. Thus this report ought to have been published in early July. The report is a month late and unfortunately, the government has become chronically late in the publication of its statutory reports. The tardiness must end.
We note that revenue intake continues ahead of budget, continuing the performance that was recorded for the first quarter of last fiscal year (July to September 2021) through ensuing months. These demonstrate that the Accelerate Bahamian Economic Recovery plan left in place by the FNM has succeeded in a robust recovery of the economy. We note that the government has prudently left most of these initiatives in place ensuring that the country is the beneficiary of the sound macroeconomic policies of the FNM.
We remind the government however that a portion of the increased tax revenue is due to the historically high inflation numbers given that the largest portion of our revenues are derived from taxes tied to the imported value of goods.
This means that Bahamians have been hit with a double whammy of higher priced goods and higher tax bills because of the ad valorem nature of our primary tax instruments. We again implore the government to return to the people the sum of the windfall in taxes derived from the recent inflationary spike.
As we have already proposed, the government can do this by immediately reducing the tax of gasoline over the medium term, at least until prices return to normal. The government MUST also eliminate the VAT on breadbasket goods, medicines and baby items.
Because the FNM has always been fiscally responsible, we again advise the government to pay for these tax breaks for Bahamian working families by reinstating the tax breaks they have given to the rich and by curtailing wasteful spending. They must reinstate the 12 percent VAT on real estate transactions over $2 million and abandon the illegal tax cut provided for new yachts. They must also scale back the $4 million in international travel and the $30 million for government consultants. The budgets for entertainment, parties and events must also be cut.
Once again, we ask: Where is the VAT holiday for Back to School shopping? Reinstate VAT Holidays for back to school and hurricane supplies.
We also remind the government that its international bonds continue to tumble in price, closing again today at historic lows. Despite the numbers in the May budget report which show at deficit of $340 million through 11 months, the government published a quarterly debt report recently which showed that Central government indebtedness increased by over $800 million for the full fiscal year of July 2021 to June 2022. We call on the government to explain why the central government debt number has come in so much larger than the reported deficit through May 2022.
To restore credibility in the bond markets and to ensure that the government continues to have ready access to the local and international financial markets at reasonable terms, we once again insist that the government prepare and submit for public consultation a comprehensive fiscal and economic plan that would provide clear plans for progressive tax reform and for expenditure containment. Until that is done, we in the opposition are not confident that we will move toward the fiscal consolidation necessary for robust and sustained economic growth and improved standards of living for all Bahamians.