The Hon. Perry G. Christie, M.P.
Prime Minister & Minister of Finance
Commonwealth of The Bahamas
Prime Minister Christie presented the 2002/2003 Budget Communication in the House of Assembly yesterday.
Referencing the downturn in the economy due to external and internal developments during 2001, the Prime Minister said it is clear that The Bahamas faces a number of strategic challenges in the year ahead. He said, *”One of the most important challenges is to demonstrate our commitment to fiscal prudence, while restoring, strengthening and diversifying the Bahamian economy.”* According to Mr. Christie, it is his Government’s task in this budget and in the budgets of the coming years to eliminate the 2001/2002 deficit, restructuring the budget so as to progressively implement the Government’s policies and commitments, as outlined in “Our Plan”.
Technical assistance will be sought from the International Monetary Fund to evaluate the present structure of Government revenues, taking into account the need to simplify the structure to assist compliance and revenue administration. Such an evaluation also would take into account possible changes relating to obligations under WTO and FTAA membership. The Bahamas, nevertheless, will not contemplate the introduction of income tax, capital tax or inheritance tax.
The proposed $1,190 billion budget features no new taxes, or increases of existing taxes. Estimates of revenue reveal a growth of $64.6 million in revenue over the previous year’s budget, to $1.2 billion, representing increases in motor vehicles and gaming taxes, and in company fees.
The budget includes revenue concessions aimed at moving the economy forward by encouraging investment, and providing relief from onerous tax burdens on households of modest means. *”The main purpose of the tax relief is to stimulate economic activity, and a more equitable distribution of the burden of taxation,”* said Prime Minister Christie. Should these purposes not be achieved quickly, it may be necessary for government to consider other measures to strengthen the revenue position and accelerate economic growth and activity.
Similarly to budgets of recent years, the largest allocation was given to Education, a sum of some $192.9 million. Following this was
$174.3 million going for interest and redemption of public debt; $161.5 million for Health Services, and $128.6 million for Security. With regard to the $174.3 million, the Prime Minister and Minister of Finance stressed the importance of containing government debt and using available resources for the most productive purposes.
Some $20.4 million has been allocated to the judicial area. On legislative matters, the Prime Minister reported that the Government will undertake to review the procedures under the Financial Transactions Reporting Act. This, however, is intended only to reduce costs and inconvenience, without compromising the effectiveness of the anti-money laundering provisions of the legislation.
**Financial Services Focus**
According to the Prime Minister, the clearest indication of the new Government’s determination to place the financial services in the strongest possible position was the creation of the new Ministry of Financial Services and Investments. *”My Government expects this Ministry to consult closely with the industry and related professions, and to come forward with policies and measures which will place the financial services sector at the forefront of international competition.”*
Commenting on the allocation of $3.9 million, the Prime Minister indicated that the new Ministry has been charged with the “dynamic” role of assisting the development of the financial services sector, promoting e-commerce, and encouraging investment in The Bahamas.
As foreshadowed in the Speech From The Throne, soon to be established will be a Financial Services Consultative Forum, intended to bring to bear the best minds in the financial services to formulate strategies to move the industry to new levels of competitiveness, opportunities and achievement. In this regard, said Mr. Christie, the Government will consult with the Bahamas Financial Services Board to ensure the fullest development of the industry. * “We consider that despite the various international initiatives and the changes in the international environment affecting the financial services sector, there is substantial scope to expand the industry in The Bahamas and enable it to reach higher levels of employment, incomes and career opportunities.”* These higher levels of employment and incomes will assist in growing Government revenues and enable Government to move towards eliminating the 2001/02 fiscal deficit.
Members of Parliament are expected to begin debate on the Budget Communication on June 5.
*(See full text of the Budget Communication under Special Reports)*