By NEIL HARTNELL
Tribune Business Editor
(May 28,2018) NASSAU,BAHAMAS- Governance reformers yesterday called for increased web shop taxes in tomorrow's Budget, coupled with 5 per cent annual spending reductions through 2023, to avoid a fiscal crisis.
Robert Myers, the Organisation for Responsible Governance's (ORG) principal, warned that imposing new and/or increased taxes on the economy's productive sectors and consumers would lead to "a disaster" and throw all hopes of increased Bahamian GDP growth "out the window".
Yet he argued that web shop gaming was the one industry able to bear increased taxation due to its "exceptionally high margins", accusing that sector of having "gotten away with murder" when the Christie administration proceeded to ignore the results of a referendum/opinion poll and legalise it anyway.
Mr Myers said the proceeds from increased web shop taxation should be used exclusively to finance education reforms, arguing that the 'D-' grade average and poor public education system graduation rates were a key impediment to greater economic growth and productivity.
While urging the Minnis administration to focus on cutting its recurrent (fixed cost) spending, such as the $745 million civil service wage bill, the ORG principal said this did not require "rash" or "dire action" such as an immediate 30 per cent cut to the public sector workforce.
He directed the Government to strike a 'balance' between economic growth and fiscal consolidation, as achieving the former would enable the private sector to absorb workers let go by the public sector. But GDP expansion, Mr Myers reiterated, requires intensive focus on improvements to the Bahamas' costs and ease of doing business.
The ORG chief's comments came amid predictions of a 'doom and gloom' austerity Budget by the Government's political opponents, who are forecasting that that the Minnis administration will be forced into a Value-Added Tax (VAT) rate rise and numerous other tax increases to deliver on its election commitments and promises.
Philip Davis, the Progressive Liberal Party (PLP) leader, also forecast the introduction of new taxes to enable the Government to finance capital works projects deferred from 2017-2018, plus a reduction in spending and sell-off of assets to cover any deficits.
"For a Government without a real growth agenda, this is a bleak outcome and a recession-inducing Budget," he argued of the upcoming 2018-2019 fiscal statement.
"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."
K P Turnquest, Deputy Prime Minister and minister of finance, declined to take the bait dangled by Mr Davis and the PLP. "The Budget will be presented on Wednesday and all answers will be given then," Mr Turnquest told Tribune Business yesterday, not saying anything further.