Yesterday, Wednesday 26th May, Prime Minister of The Bahamas, Hubert Ingraham, presented his 2010/2011 budget to Parliament.
He started by saying, "Mr. Speaker, this is the 33rd Budget Exercise in which I will have participated in this Parliament as an MP; the 14th as the Prime Minister and the 6th as Minister of Finance. Such extensive experience in this country’s fiscal affairs has enabled me to observe the many ebbs and flows of economic life in The Bahamas and the attempts by successive Ministers of Finance to grapple with them. I have learned many profound lessons and made a number of keen observations..."
"It has also been my observation that nothing lasts forever, neither good times nor bad times. These harsh economic times which we face are coming to an end but ever so modestly. The Budget being presented to Parliament seeks to put us in the best position to maximize the gains from the emerging modest recovery through sacrifice, service and reform."
"This is a Budget that contains the most significant structural fiscal action of any Budget in recent years, with the overriding objective of enhancing the nation’s economic prospects by putting its fiscal house in order on a sustained basis. I want to stress that the fiscal targets and budget strategy that will so engage us now have relevance and meaning because they are essential to the economic welfare of our people. Failure to act would jeopardize our solid reputation as an attractive destination for foreign investment, would subject us to much higher borrowing costs and would dampen prospects for stronger growth and higher standards of living. We cannot and we will not fail."
Mr. Ingraham then went on to inform Parliament and the people of The Bahamas of;
- The Global Economy
- The Bahamas Economy
- The Fiscal Performance of 2009, 2010 and beyond
Prime Minister Ingraham then outlined the Recurrent Expenditure; "In light of the key fiscal priorities of this Budget, overall allocations to Government Ministries, Departments and Agencies in 2010/11 are being reduced by 2.6 per cent from their level in 2009/10. Despite this, all should have funding sufficient to meet their core mandate to the public. Priority spending will continue to be given to Education, Health and National Security.
In order to secure the attainment of our fiscal objectives, the Government is also implementing a number of targeted expenditure reductions, namely:"
The salary of the Prime Minister is being reduced by 10 per cent and those of Parliamentarians, in both the House of Assembly and the Senate, are being reduced by 5 per cent;
Insurance premiums for vehicles, vessels and aircraft are being placed under the purview of the Ministry of Finance to allow for the negotiation of a more favourable price for insurance;
Hubert Ingraham then went on to discuss the Revenue Measures, "Again this year, the Government is introducing a number of revenue measures to further rationalize rates and to continue the simplification of the tariff structure as follows:
the rate on computer networking equipment is being reduced form 45 per cent to 10 per cent;
the taxation of vehicles and to promote the use of more fuel-efficient vehicles, it is proposed to reduce the number of excise tax rates on cars and trucks to two: a rate of 65 per cent on passenger vehicles with an engine of 2000 c.c. or less and a rate of 85 per cent for all other passenger vehicles and trucks.
It is proposed to reduce the differential in taxation between domestic and imported beers. Accordingly, the Spirits and Beer Manufacture Act will be amended to provide for the rate of tax on domestic production to be increased from $4 to $6 per gallon.
"A number of tax rates and administrative arrangements are being modified to produce the additional revenues that are required to achieve the planned and required increase in the revenue yield of the tax system:
The various rates of stamp tax on realty transactions are being increased by two percentage points. This will not impact the continuation of exempting first time home-owners from the payment of Stamp Tax on a dwelling home or property for the construction of a dwelling home valued up to $500,000;
Stamp tax on bank transactions is being increased by 15 cents with effect from 1st July 2010;
The air and sea departure taxes are being increased by $5 effective on July 1, and the increase for cruise ship passengers is effective on October 1;
The hotel room tax is being increased to 10 per cent of the room rate effective July 1;