Budget Tales – Part 1

OURMONEYSPENDING INCREASE – The government says it plans to reduce our now record debt to GDP ratio (60.9%) and rein in spending – but the 2014 budget says the government actually plans to spend $86 MILLION MORE on Recurrent Account in this upcoming budget year. The Recurrent Account is what pays things like salaries, operational expenses, travel, utilities, etc. And while the government all year long has boasted of major recurrent spending cuts it has carried out, the 2014 budget’s tables show that government spending only decreased on paper by $17 million in 2013/2014, which is not even near a 1% decrease in overall budgeted spending.

PROJECTED REVENUE – When the government initially planned to implement VAT at 15% at the beginning of the fiscal year (July 1), it said it expected to collect about $200 million in VAT revenue alone for the full fiscal period (12 months). Now it says it will go in at 7.5% in January (half the rate for only half the period of time), but its revenue projections do not reflect that change in rate and time frame. The 2014 budget says the gov’t plans to take in $267 million MORE this upcoming budget year than the last. WHERE IS THAT REVENUE AMOUNT GOING TO COME FROM? TAXES FROM NUMBERS HOUSES ARE NOT EVEN LISTED IN THE 2014 BUDGET AS A REVENUE MEASURE, which means taxes from numbers houses do not factor in the budget’s $267 million revenue increase projection. If you are not substantially raising or creating taxes elsewhere, and you are extending duty exemptions for the Family Islands, and you are also creating a brand new duty exemption for Grand Bahama outside its “Port Area” (will get into that new exemption later on), how are you projecting to take in that increased amount of money for 2014/2015 when you will no longer be implementing your single hugest planned revenue generator (VAT) at the same rate and over the same length of time? What then, will you be charging 7.5% VAT on as of January that you were not originally planning to charge VAT on at all at the initial 15% rate, in order to make up the difference?

DOUBLE TAXATION – The 2014 budget does not call for reduced customs duties, so we will be paying 7.5% VAT in addition to the current rates of customs duties as of January 2015.

ECONOMIC STANDING – While our economy this year is only expected to see less than single digit growth (0.7%), the NATIONAL DEBT THIS YEAR HAS DOUBLE-DIGIT GROWTH – an 11.5% increase.

ACTUAL REVENUE THIS BUDGET YEAR – Despite all the increased taxes and fees that the government instituted last July and its claim that it strengthened revenue collection measures, the 2014 budget says that the government will actually have a revenue shortfall of $38 million this year, meaning the government will have taken in $38 million LESS than it said it would for 2013/2014. Remember when State Minister Michael Halkitis told the press just a short time ago that revenue intake for this year was far ahead of their projections? When he said that I just shook my head – because he never gave the media the figures to back up that claim, which is the exact stunt he pulled on the media the previous fiscal year. Overall the government says it will have collected $85 million more in revenue this current budget year (2013/2014) than the last – and will then turn around and spend $86 million more this upcoming year than the last!

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