PLP’s ‘tactical’ plan promises new and already existing economic solutions

As the country nears the day Bahamians make the most important quinquennial national decision, the Progressive Liberal  Party (PLP) is hoping their countrymen buy into their “tactical” economic plan that will have to be executed in the midst of the worst days of the COVID-19 pandemic the country has experienced yet, and amid the worst economic conditions any Bahamian government has ever faced.

At the top of the PLP’s tactical plan is to review the country’s current tax regime, something the current Free National Movement (FNM) government says is already in the works.

But the most palpable of the party’s planned, immediate changes is to lower the value-added tax (VAT) rate from 12 percent to 10 percent.

The party has imparted this promise before and remains steadfast in its commitment to lowering the rate for one year, predicting that the action would create more disposable income and increase spending habits.

In its second year in office, the current FNM administration raised VAT from 7.5 percent to 12 percent.

The PLP’s plan also calls for “additional VAT relief” though it does not specify what those measures are.

The PLP does commit in its plan to making the country’s tax system more equitable, as the current tax regime is seen as heavily burdensome on the middle class and the poor.

The party has also pledged to reinstate the Revenue Enhancement Unit and to ensure high-end properties are current with their real property tax, which remains the tax with the highest delinquencies.

The FNM successfully completed negotiations with the Federal Aviation Administration (FAA) in order for the country to collect overflight fees.

The PLP said in its economic plan that it will ensure that those fees are collected.

The FNM touted the Commercial Enterprises Act it ratified in the early days of its administration, hoping it would attract the foreign firms – especially tech firms – that would employ and train Bahamians who would eventually take over positions in those firms held by expatriate workers.

However, the bill did not attract the number of firms government hoped.

Part of the PLP’s plan is to repeal the act and to “grant work permits (to companies) where no qualified Bahamian can be found”.

Last year, the country sank deeper into debt than it has ever been, and the PLP proposes to create a comprehensive schedule to address the country’s debt, which could approach $11 billion, or around 100 percent, of the country’s gross domestic product, as of next year.

“(The PLP will) cause a comprehensive debt schedule showing payments due (principal and interest) on both foreign and B$ outstanding debt on Day One,” the party’s plan said.

“Engage a debt management committee with a private sector component to review and restructure loans where appropriate on Day One.

“Engage international multilateral financial institutions, e.g. World Bank, for low-interest borrowings.

“Focus on Public Private Partnerships (PPP) and project-specific funding.”

The FNM’s strategies for fiscal reform had the country’s finances on a sustainable path until Hurricane Dorian struck Grand Bahama and Abaco in 2019 and the COVID-19 pandemic shut the country down in 2020, causing unsustainable growth in borrowing and spending.

To preserve fiscal integrity, the PLP contends it will “stop financial leakage in our public sector” by doing away with insider deals.

The FNM’s fiscal responsibility reforms are already law, and include procurement methods that would eliminate such insider deals.

The PLP has vowed to continue using the Small Business Development Center/Access Accelerator to fund small and medium-sized businesses through an immediate investment of $50 million, plus $250 million over five years, should they become the government.

The FNM pledged the same $250 million over five years after it started the entity.

The PLP also pledges to increase minimum wage to $250 per week and address any public service arrears.

And given that the pandemic has put so many Bahamians out of work, the PLP said it would work with landlords and banks to ensure people are not put out of the places where they live.

“(The PLP will) work with tenants and landlords to reschedule rent payments in line with short-term ability to pay, providing breathing room until the economy recovers, and avoiding a severe homelessness crisis,” the PLP plan explains.

“Increase funding to social services for rental assistance.

“Work with banks to keep people in their homes. Through a public-private partnership, devise a plan to waive or reduce the interest payments on qualifying mortgages.”

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