Bahamas: PM reveals 2023 budget with no new taxes

PRIME Minister Philip “Brave”

Davis said the government is arresting the national debt and reducing the deficit, unveiling a budget last week that aims to improve the country’s fiscal performance through better tax collection rather than introducing new taxes.

Mr Davis announced no increase in value-added tax, customs duties, excise duties or real property taxes for the 2023/2024 fiscal year, which begins July 1.

Instead, he said the government would establish a “large taxpayer unit” to improve revenue collections from businesses owing more than $1bn in taxes and implement a special centre to identify irregularities in revenue reporting.

He said staff levels in Family Island revenue collection agencies would be increased, and there would be an updated fee schedule for pleasure craft registration to address chronic revenue underperformance in the marine sector.

Cracking down on people or businesses that fail to pay taxes has been a theme of the Davis administration in 2023.

In April, the Department of Inland Revenue (DIR) made headlines when it raided two businesses in Harbour Island that collectively owed the government $1.3m in taxes.

“It is noteworthy that, when pressed to do so, a significant number of people readily pay off their arrears,” Mr Davis said yesterday. “This suggests that they weren’t unable to pay their taxes. They simply didn’t do so.”

Mr Davis said $2.1bn in revenue was collected during the first nine months of the 2022/23 fiscal year, a 14.5 per cent increase compared to the previous year.

“Improved performance in respect of total revenue was supported by a period-over-period increase of $291.3m in tax revenue, which totalled $1.8bn during the period,” he said.

Stamp taxes on financial transactions, VAT on real estate transactions and departure tax collections are areas where the collected revenue surpassed budget forecasts.

Meanwhile, Mr Davis said expenditure increased by $145.3m for $2.3bn during the first nine months of the fiscal year.

The government is projecting a GFS deficit of $131.1m in the next fiscal year and a surplus of $109.2m in the 2024/2025 fiscal year.

“Compared to the previous year, the deficit to date represents a decrease of $120.1m from the deficit of $336.3m in the same period of the prior year,” Mr Davis said. “The deficit in the previous year accounted for 2.7 per cent of nominal GDP.”

“At the end of March, the primary balance reflected a surplus equating to $175.6m, a striking improvement from the primary deficit of $2.4m in the previous year. The primary surplus experienced in the first nine months of Fiscal Year 2022/23 greatly exceeded the targeted $25m set in the draft estimates of revenue and expenditure, as well as the $4m deficit projected in the 2022 Fiscal Strategy Report.”

“The sizeable surplus signifies that primary government spending, that is public spending excluding interest payments, is less than revenue collection. A continued primary surplus is essential to the target of achieving a balanced budget by Fiscal Year 2024/25, and reducing the burden of central debt over the medium term.”

Mr Davis said at the end of March 2023, the debt stock equalled 83.5 per cent of GDP, whereas it equalled 87.3 per cent of GDP at the end of 2022.

Following his communication, Mr Davis tabled a resolution in the House of Assembly for the government to borrow $45,219,194 to offset budget shortfalls for the remainder of the fiscal year.

(Tribune242)