Deputy Prime Minister Peter Turnquest.
By SYANN THOMPSON
Tribune Staff Reporter
DEPUTY Prime Minister Peter Turnquest has refuted what he called “misinformation” about value added tax increasing to 15 percent in January 2020.
Mr Turnquest, who is also Minister of Finance, said despite social media speculation the government has no plans to increase VAT in the near future.
“I have said publicly and privately that the government has no intentions to raise VAT in the foreseeable future,” Mr Turnquest said.
“The hurricane dealt us a significant setback however, it will not derail us from the path we have been on to bring long-term sustainable relief to the Bahamian people and improve our fiscal rating.”
His comments came a day after Progressive Liberal Party Leader Philip “Brave” Davis said he believes the country is heading toward a financial crisis and could possibly have a credit downgrade. However, Mr Turnquest is resolute there will be economic activity in 2020 that will give the country a boost.
“With reconstruction activity and new investments, we expect growth to accelerate next year and for us to achieve the desired deficit and debt to GDP goal by 2024,” said the finance minister.
Last week, Mr Turnquest outlined the government’s Fiscal Strategy Report in the House of Assembly which shows that the nine-figure deficit will continue for the next five years. Despite the national debt soaring to 1.3 billion in five years, the deputy prime minister said last week that tourism arrivals partnered with foreign direct investment remains “on track” and will allow the country to shrug off Hurricane Dorian’s devastating impact. He added to this that the economy will expand by 2.1 percent in 2021.
For his part, Mr Davis said he thinks the situation is worse than the government is willing to admit.
Mr Davis said on Sunday: “This administration is now at a crossroad. It can no longer pretend that it has a handle on this self created fiscal crisis. The impact of Dorian cannot be used as the reason for the obvious decline in the government’s ability to provide basic public service. Many Bahamian businesses have failed or are now on the verge of failing because of the gross fiscal mismanagement of this ‘balance sheet’ administration who ignores legitimate contractual obligations to achieve contrived and elusive deficit targets.”
Mr Davis said the government should establish an Economic Advisory Council “forthwith” to look at the fiscal and economic state of the country and design a social contract that would “provide binding guidelines for expenditure, revenue, wage and pension reform policies over the next five years.”
“This is a perilous time for the Bahamas as the government has proven itself incapable of managing the economic and fiscal affairs of this country,” he added.
“No amount of hubris, arrogance or grandstanding by the current minister of finance can change this reality. It would be incredibly selfish and unpatriotic of me and my political colleagues to watch and do nothing as this administration through sheer incompetence drives this country over a fiscal cliff. We believe that the true fiscal state of this country is worse than being reported by the government as blatant political considerations now seem to govern the reporting and classification of government expenditure and revenue. One obvious example is the treatment of the purchase and ongoing operating subsidy to the Grand Lucayan, amounting to $77 million in expenditure, is being classified as an investment so as to exclude it from the deficit calculation. There are others: the shareholder loan to Aliv of $10.5 million, the treatment of the loan to the Bahamas Power and Light of $15 million and VAT refunds to Buckeye and Statoil estimated at $50 million.”