Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697645953868.pdf (Bahamas)
/ CONTENTS Fiscal Summary About This Guide State of Financial Affairs Budget Breakdown Spending Priorities Targeted Tax Incentives Getting The Fiscal House In Order New Revenue Measures Targeted Tax Relief Reducing & Managing The Cost of Government Holding Government Accountable 1 THE PEOPLE’S BUDGET FISCAL RESPONSIBILITYBETTER TODAYGREATER TOMORROWA GUIDE TO THE BUDGET FISCAL The Government’s financial summary or fiscal balance is the difference between total revenue and total expenditure.
In other words, the amount of money collected by the government in taxes less the amount of money spent on government services and initiatives.

SUMMARY When the Government’s revenue is greater than its spending it is known as a f iscal surplus.

When the Government spends more money than it earns it is called a f iscal def icit.

“In this Budget, we are giving Bahamians the unfiltered truth about the state of public finances.
It might not be what any of us want to hear, but it is the reality, and we are addressing these matters with a level of transparency and fiscal responsibility that no other government has done before.” The Hon.
K. Peter Turnquest, Deputy Prime Minister & Minister of Finance DETAILS Recurrent Revenue Capital Revenue Total Revenue Recurrent Expenditure Capital Expenditure Total Expenditure Fiscal Balance 2017/2018 ($MIL) 2018/2019 ($MIL) 2,150 2 2,152 2,243 230 2,473 -321 2,649 2 2,651 2,589 299 2,888 -237 i * M n o r d i ff e r e n c e s a r e d u e t o r o u n d i n g .
19% REVENUE INCREASE 14% EXPENDITURE INCREASE 26% DEFICIT REDUCTION In the budget, 24 of the 53 sections of the budget excluding interest payments, saw reductions in their budget allocations and three were given an increase under 1.5 per cent.

Still, there was an increase in overall expenditure due to: higher interest payments of $89 million, and the provisions made for addressing outstanding arrears and under-budgeted commitments.
In the budget, recurrent revenue represents 20% of GDP, an improvement in the revenue yield of $500 million.

The VAT increase generates $400 million in new revenue.

Other revenue measures combined (improved collections, gaming tax, immigration and port fees increase, and other user fee increases and structural reforms) provided the balance of the increase.

In the budget, the $237 million deficit represents 1.8 per cent of GDP.
This means the deficit will come in at the anticipated mandated fiscal responsibility target for FY2018/19.

It will also be $73 million lower than the estimated deficit for FY2017/18.

2 3-YEAR FISCAL CONSOLIDATION PLAN What is Fiscal Consolidation?

This is the Government’s plan to reduce the amount of money it borrows and that it owes.

Iwts plan to reduce its deficit, or live within its means, in other words.
The Government’s three-year fiscal consolidation plan includes actions to restrain expenditure, enhance revenues and reduce government debt levels.
THE FISCAL PLAN Year 1 FY2018/19 • Fiscal deficit reduced to $237 million (1.8 per cent of GDP) • Right-budgeting for known commitments ($76 Mil) • Finance priority policy initiatives (Socio-Economic Development Agenda) • Implement tax relief measures • Adopt fiscal responsibility best practices Year 2 FY2019/20 • Fiscal deficit reduced to $85 million (0.6 per cent of GDP) • Begin Customs and Excise Duty Reductions Year 3 FY2019/20 • Fiscal Surplus of $10 million achieved • Further material cuts in Customs/Excise duties (Total reductions: $100 Million) PROJECTED DEBT OUTCOME 57% of GDP 54% of GDP 52% of GDP AT A GLANCE • Projected Recurrent Revenue: $2,648 million • Top 3 Revenue Sources: VAT (40%), Trade Taxes - Customs Duty and Excise Taxes (24%), Stamp Taxes (6%) • Planned Recurrent Expenditure: $2,589 million • Largest Expense Categories: Grants, Other Fixed Charges and Special Financial Transactions, Wages and Allowances, and Other Contractual Services.
• Projected GFS Deficit: $237 million 2 / OFFICIAL BUDGET DOCUMENTS LOOK LIKE THIS In other words, they contain hundreds of f inancial pages that may have complex technical information.

Download all budget documents at: www.bahamas.gov.bs.

The Budget Guide is a simpler, less technical version of the Budget that is inspired by the international best practice of publishing “Citizen’s Budgets”.

The Budget Guide is not intended to replace the detailed budget communications.
It supplements the technical documents, presenting key information in easy to understand language.

It can be used as a reference document for citizens to hold the Government accountable.

DID YOU KNOW?

Governments all over the world generate money from taxes.

They use that money to provide services to citizens, to develop local communities, and to stimulate economic growth.

The Budget explains all of the government’s tax initiatives and its spending plans.
It also provides a snapshot of past f inancial performance and the Government’s current f inancial position.

What does ‘f iscal’ mean?

The word f iscal is used a lot when talking about the budget: fiscal year, fiscal policy, fiscal plan, fiscal consolidation.

It simply refers to financial matters of the government, including taxes, debt and policies governing public finances.
BUDGET OBJECTIVES The Rhyme & Reason The Government made its budget decisions to achieve a range of fiscal consolidation objectives and to advance a socio-economic vision.

1 2 3 Safeguard against future governments living beyond their means, racking up millions in unpaid bills, and piling more debt on future generations.

Restore the country’s financial health.

Clear up millions in unpaid bills to small and large government vendors once and for all.
4 5 6 Increase the Government’s revenue to sustainable levels that meet its financial needs through a variety of new tax measures.

Meet fiscal targets in a structured way, eventually balancing the budget and reducing debt levels.

Invest heavily in underserved communities and vulnerable populations to spread the benefits of inclusive growth.

7 8 Cushion the impact on poorer families and vulnerable Bahamians as the country goes through a period of shared sacrifice and fiscal adjustment.
Improve the competitiveness of the Bahamian workforce, to provide greater opportunities for better work.

9 Foster a culture of entrepreneurship and innovation so Bahamians are more empowered to create their own jobs.

10 Demonstrate leadership in adopting green technology, and encourage Bahamians to do the same.

Learn more in The Budget Guide.

3 / THE MINISTRY OF FINANCE FINANCIAL State of THE NATIONAL DEBT High debt levels threaten the country’s economic stability.
Debt levels have been continuously climbing for the past ten years.

Between 2008 and 2017, debt levels The country is facing extraordinary and challenging circumstances, due to the state of public finances, which could undermine the stability of the Bahamian economy over time.

AFFAIRS increased by 160 per cent.


More money spent on servicing or paying off the debt means fewer resources for other purposes, such as education, health care, and other important government services and special development projects.
$7.2 B Unsustainable Debt Level $381M High interest payments on debt $360M Sizeable unpaid bills accumulated $76M Previously under-budgeted commitments These fiscal realities have been signaled by Bahamian economists, international agencies and credit rating entities as worrisome trends that must be corrected.
If left unaddressed, they have the potential to: • Trigger further credit downgrades • Increase borrowing costs for the country • Significantly decrease the Bahamian standard of living • Make the economy less competitive and attractive to investors • Subdue economic growth • Threaten the country’s economic stability We know from the experience of others that out- of-control fiscal management can snowball into a full-blown economic crisis.
To address the state of f iscal affairs, the Government took the decision to raise additional revenue through increased taxation and enhanced revenue collection measures.

The Government’s rationale for this policy direction is to provide the resources to fund all of it’s old financial commitments which, for the first time, have been disclosed in the budget communications.
At $1.09 billion, Debt service is 8.3% of GDP (Debt Service = Total Interest + Principal Payments) 14% of revenue goes towards interest payments, which is equal to 14 cents out of every dollar earned.

2018/19 BORROWING • New Borrowing Authorization (loans, etc.

): $183 million • Draw Down on Existing Loans: $54 million • Existing Debt Coming Due FY2018/19: $709 million.

The Government plans to borrow this amount to repay the debt.
Refinancing debt is customary and will not increase the Government’s overall debt levels.

GOVERNMENT DEBT TRENDS $7,397 DEBT LEVEL ($MIL) DEBT TO GDP (%) $7,190 $6,550 $5,965 $5,637 $5,160 $4,680 “Facing the situation that we have, we could have presented a misleading budget as other governments have done, with under-budgeted allocations and hidden obligations.

We could have borrowed more and kicked the can down the road.
Playing this game would only delay the inevitable day of reckoning and make a bad situation worse.” The Hon.
K. Peter Turnquest, Deputy Prime Minister & Minister of Finance 4 $3,401 $3,085 30.1% 33.9% 2009/10 2008/09 $3,908 $3,556 37.6% 35.3% 43.9% 47.8% 49.6% 50.5% 54.6% 57.2% 56.2% 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 INTEREST ON DEBT INTEREST ON DEBT ($MIL) $202 $191 $187 $223 $205 BUDGETED TOTALS $381 $292 $281 $273 $253 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 THE MINISTRY OF FINANCE / BUDGET BREAKDOWN WHERE IS THE MONEY COMING FROM?
DETAILS Value Added Tax (VAT) Trade Taxes 2018/2019 ($MIL) 1,062 644 T R A H C E U N E V E R X A T Stamp Taxes Tourism Taxes Property Taxes Business License Fees Domestic Gaming Tax Customs Department Fees Dept.

of Immigration Fees Motor Vehicle Fees Port Department Fees Other Taxes Total 172 147 132 102 70 60 74 50 17 118 2,648 HOW IS THE MONEY GOING TO BE SPENT?
53% 30% 9% 6% 2% S E I R O G E T A C R O J A M Y B G N D N E P S I Grants, Fixed Charges & Other Special Transactions $1,399 Million Personal Emolument & Allowances $793 Million Other Contractual Services $232 Million Rent $156 Million Other $55 Million Total $2,636 Million / Top 5 Sources of Revenue 40% 24% Value Added Tax (VAT) Trade Taxes 6% 6% Stamp Taxes Tourism Taxes 5% Property Taxes $620 MIL Grants and Fixed Charges Includes UN & CARICOM membership fees, contributions to children’s homes, the Bahamas Crisis Center; school boards; the Bahamas National Trust, the University of the West Indies, and hundreds of others important institutions, & other special transactions like the sinking fund.
$398 MIL State Owned Enterprises (SOEs) Subventions to 23 SOEs account for15 per cent of the government’s total expenditure.

$381 MIL Interest on debt payments 14 per cent of total expenditure.
Central Government’s Wage Bill The largest individual recurrent expenditure Year 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Wage Bill ($M) 586 587 614 641 659 664 689 756 790 793 % Change 0.1% 4.6% 4.4% 2.8% 0.7% 3.8% 9.7% 4.5% 0.4% THE MINISTRY OF FINANCE SPENDING BY MINISTRY/DEPARTMENT 2018/2019 ($MIL) DETAILS Ministry of Finance Ministry of Health Min.
of Public Service & National Insurance Department of Education Royal Bahamas Police Force Ministry of Tourism & Aviation Treasury Department Ministry of Education Royal Bahamas Defence Force Ministry of Public Works Dept of Environmental Health Services Department of Social Services Ministry of Foreign Affairs Department of Immigration Customs Department Ministry of Youth, Sports & Culture Min.

of The Environment & Health Services Office of The Prime Minister Dept.

of Correctional Services Dept.


of Local Government Ministry of Agriculture & Marine Resources Department of Inland Revenue Attorney General’s Office Department of Public Works Department of Information Tech $360.7 $293.9 $289.9 $205.6 $127.9 $120.1 $100.9 $92.7 $59.9 $48.7 $44.8 $39.8 $35.5 $35.5 $34.4 $28.2 $26.8 $26.8 $26.7 $26.4 $19.3 $19.0 $18.5 $17.9 $17.7 $14.5 Above $100 M Above $30 M Above $10 M Office of The Judicial (Courts) Ministry for Grand Bahama $12.5 Min.
of Social Services & Urban Development $11.6 Ministry of Transport & Local Port Department Ministry of National Security Cabinet Office Post Office Department Ministry of Labour Department of Agriculture Department of Road Traffic Department of Land & Surveys Department of Statistics Registrar General’s Department Department of Meteorology Department of Marine Resources Dept.of The Auditor General Department of Housing Department of Labour Ministry of Financial Services Court of Appeal House of Assembly Bahamas Information Services Government Printing Department Parliamentary Registration Department Governor General & Staff Department of Physical Planning Department of Archives The Senate $9.6 $8.5 $7.5 $7.4 $7.1 $6.5 $6.4 $5.3 $3.7 $3.6 $3.6 $3.0 $2.8 $2.8 $2.6 $2.5 $2.4 $2.3 $2.2 $2.0 $1.7 $1.4 $1.1 $1.0 $0.7 $0.3 5 SPENDING SPENDING PRIORITIES PRIORITIES ADVANCING A ADVANCING A SOCIO-ECONOMIC AGENDA SOCIO-ECONOMIC AGENDA The Budget provides for spending on new programs targeted to advance a socio-economic vision of inclusive growth, social progress, economic development, public sector reform and modernisation, economic diversification, and environmental sustainability.
Inclusive Growth Serving underserved communities Economic Diversification Creating a roadmap for economic development OVER THE HILL COMMUNITY DEVELOPMENT PARTNERSHIP INITIATIVE Activities to strengthen e-learning, improve solid waste management increase the availability of water, to manage and maintain public parks, and stimulate investment for participants in the affordable housing programme.
AFFORDABLE HOUSING PROGRAM Implementing land subsidies and tax waivers worth $120,000 per family for participants in the affordable housing programme.

FAMILY ISLAND AIRPORTS REDEVELOPMENT Ongoing rehabilitation of Family Island airports, vital gateways for local and international transport between the islands.

PRIME MINISTER’S CULTURAL GRANT AWARDS Small grants ranging from $1,000 to $25,000 to support Bahamian artists involved in projects that promote the culture of The Bahamas.
$5 MIL $2 MIL $15 MIL $1 MIL Social Progress & Economic Development Investing in workforce development and entrepreneurship DIVERSIFICATION THROUGH THE DIGITAL & BLUE ECONOMIES Three-year technical cooperation project with the Inter-American Development Bankfocused on promoting economic diversification through the digital economy (information technology) and the blue economy (marine resources).
$500 K Environmental Sustainability Building eco-friendly infrastructure LED STREET LIGHT REPLACEMENT PROJECT Initial funding for a four-year LED street light project projected to generate 500k per month in longterm savings.

$5 MIL $5 MIL FAMILY ISLAND SOLAR FARM PILOT PROJECT First major BPL solar farm in the Family Islands this fiscal year.

Prototype for solar power generation around the country.
Public Sector Reform And Modernisation Growth Enhancing public sector service delivery PUBLIC SECTOR YOUNG PROFESSIONAL RECRUITMENT INITIATIVE Build the professional capacity of the Public Service by recruiting young professionals to replace the ongoing number of retiring professionals.

FULL-SCHOLARSHIPS FOR BTVI STUDENTS Free tuition through scholarships for full-time degree and certification students, so more Bahamians can increase their competitiveness, earn better wages and create their own jobs.
BTVI facilities will also be upgraded.

SMALL BUSINESS DEVELOPMENT INITIATIVE Includes direct financing for micro, small and medium enterprises in the form of micro-loans, small loans and government guarantees between $5000 and $250,000, as well as other business development and management support services.
$4 MIL $8 MIL $1 MIL $2.6 MIL $5 MIL 6 DIGITAL BAHAMAS INITIATIVE Foster the country’s competitiveness by enhancing the digital infrastructure of the public service and reducing the cost of conducting business with the Government.

FREEDOM OF INFORMATION (FOI) Initiate training in the Public Service and establish the systems needed to implement the FOI Act, 2017.
THE MINISTRY OF FINANCE / ADVANCING A SOCIO-ECONOMIC AGENDA TARGETED TAX INCENTIVES Economic Empowerment Zones INCLUSIVE GROWTH Proposed legislation will establish concessions on of real property tax, customs duties, excise duties, business license fees and stamp tax for designated Economic Empowerment Zones, beginning with the historic “Over the Hill” community.
Building an Airplane Registry ECONOMIC DIVERSIFICATION The Government’s plan to create an airplane registry industry is based on a policy of promoting entrepreneurship, economic diversification and job creation.

Duty-free entry on airplanes and helicopters is an important part of building this industry.
STIMULATING RETAIL CLOTHING & MANUFACTURING INDUSTRY SMALL BUSINESS DEVELOPMENT New duty concessions will help to reduce the retail cost of clothing and shoes to consumers, and empower small manufacturers of apparel, including tailors and seamstresses.

Duty free entry for clothing and shoe imports upon application by importers and retailers.

Duty removed from sewing supplies and notions, including: fabric, thread, zippers & buttons.
Duty free entry for garment processing and manufacturing equipment PROMOTING GREEN ENERGY ENVIRONMENTAL SUSTAINABILITY At the new duty rates, energy efficient vehicles and brand new small vehicles will be much more affordable.

• Duty-free entry on solar kits, upon application • 10 per cent on electric motorcycles • 10 per cent on rechargeable batteries, other than conventional car batteries.
10% DUTY Electric & Hybrid Cars 25% DUTY Brand New Small Vehicles *Valued at $50k & under *Engine sizes up to 1,500cc The Government introduced a collection of tax incentives to advance its socio-economic vision.

The objective is to improve the quality of life for Bahamians by reducing retail shopping costs, making new cars more affordable and adopting green technology.
Other Concessions Extended • For five years: The First-time Homeowners stamp tax exemption • For two years: The Duty exemption on materials used for the renovation, repair and upgrade of dilapidated buildings • For one year: The City of Nassau Revitalization Act.

• For one year: The Family Island Development Encouragement Act DID YOU KNOW?

You don’t have to wait to eat better.

There is already a list of healthy food items that are duty free!
The Government eliminated customs duty on several healthy food options last year and added three new items* in the new budget.
Duty Free Healthy Foods Almonds, Walnuts, Pecans, Peanuts & All Nuts Honey Veggie meat substitutes Pasta Coconut Oil Sesame Oil Soybean Oil Tuna, Mackerel, Salmon & All Canned Fish Spelt Flour, Coconut Flour, Cassava Flour & All Flour *Tofu *Whole and Fillet Salmon *Frozen Fish Fillets / THE MINISTRY OF FINANCE 7 THE FISCAL IN ORDER The Budget addresses a number of financial pressures, including the buildup of unpaid bills, other contractual obligations and the rising interest payments on government debt.
The Government’s objective is to put the past practices of fiscal indiscipline behind and to draw a line in the sand.

Additional revenue generated from new tax measures will help to achieve these objectives.

HOW WILL NEW REVENUES BE SPENT?

$76 MILLION $19 MILLION $89 MILLION $172 MILLION Adequate budgeting for known commitments that were previously under-budgeted across the breadth and scope of government expenditures.
New recurrent expenditure policy initiatives Additional interest payments Partial payment of the arrears in the coming year Other Oustanding Commitments Hundreds of other Bahamian businesses such as contractors, caterers and lunch vendors, among others.

What is right-budgeting?

When the amount of money included in the budget is too little to cover the cost of government commitments, corrective action is needed.
This is known as right-budgeting: The practice of properly budgeting for all of the government’s contractual commitments.

• A $4 million government food program only had a budget of $2.5 million.

• A $6 million commitment for immigration related software and hardware to support the Passport Office was never specifically budgeted for.
G N I T E G D U B T H G I R N O I T C A N I • $9 million in commitments for hardware and software support contracts to maintain the critical core IT functions of the Bahamas Government were never specifically budgeted.

OVERDUE PAYMENTS TO BE SETTLED 2018/19 Payments Vendors ($MIL) Cruise Lines Operators 17 Settlement For Contingent Liability- BOB 17 National Drug Plan Arrears 14 Rent Arrears 14 B.E.C.

Arrears Action Plan 12 VAT Refund Arrears B.T.C.

Arrears 11 10 Prov.
Arrears 11 10 Prov.

For Resolve Interest Payment - BOB 9 Development Contracts (Canadian Bank Note) 6 Public Private Partnership (Arawak Homes) 6 Water 4 Capital Outstanding Commitments 2 Mortgage Relief Programme Other Outstanding Commitments 0 50 TOTAL 172 3-YEAR PAYMENT PLAN The Government developed a three-year payment plan to settle its $360 million in arrears.
As these bills are settled, the Government plans to reduce customs duty and excise taxes on the order of $100 million, bringing down the cost of imported goods.

This plan is in alignment with the country’s efforts to participate in the World Trade Organisation (WTO) framework.
YEAR 1 YEAR 2 YEAR 3 • Clear $172M in arrears • Right-budgeting for known commitments • Clear $106M in arrears • Begin customs and excise duty reductions • Clear residual arrears of approximately $75M • Increase signif icant cuts in customs and excise duties PREVENTING FURTHER BUILDUPS 8 8 1 FISCAL RESPONSIBILITY The implementation of fiscal responsibility legislation will create a legally-binding framework to prevent runaway government spending from occurring again.
The law will cap government spending so that it cannot grow faster than the economy’s overall growth rate.

2 STRUCTURAL REFORM The Government’s planned upgrade to its financial processes and accounting system, including the planned move from cash-based to accrual-based accounting, will provide the means to better track government spending on an ongoing basis.
THE MINISTRY OF FINANCE / / NEW REVENUE MEASURES A Package of Reforms The Government made the policy decision to increase VAT to 12 per cent, based on a sober assessment of the country’s financial position and its ability to achieve fiscal balance and economic sustainability.

The VAT increase is part of an overall tax reform strategy that includes increased taxation as well as enhanced revenue collection measures.

• Reassessing user fees and services that have not been adjusted for years.
• Considering other fees that adequately cover the cost of operations.

• Exploring areas that can yield additional revenue such as real property tax on foreign-owned vacant land and licensing fees on large commercial vehicles.

VAT TAX: +$400M Effective July 1, 2018, Value Added Tax will be charged at 12% on goods and services.

The target VAT exemptions will take effect on August 1 to allow businesses to adjust their systems.
GAMING TAX: +$33.5M The Budget introduces a new tiered tax structure for the domestic gaming industry.

Consistent with international norms, the Government’s policy is that domestic gaming industries should provide a greater return to the state, while still permitting a fair return to the licensed operators.

IMMIGRATION FEES: +$21M New immigration fees will ensure that the revenue generated is better able to cover operating costs.
PORT FEES: +$8M New port fees will now meet international standards and better cover operational costs.

REVENUE ENHANCEMENT UNIT: +$80M The Government has mandated the Revenue Enhancement Unit to maximise collections from existing revenue.

An amendment is being proposed to the Financial Administration and Audit Act to provide the authority to the Ministry of Finance to form an inter-departmental unit that will be responsible for enhancing revenue across the major areas of taxation.
As part of our three-year plan we intend to reduce taxes.

When Bahamians go to a store they see the VAT on their bill.

That is the relatively small tax for goods.

The big, big taxes are hidden.

The item someone is buying may have a 45 per cent customs duty, or 65 per cent.

That’s the hidden tax that makes things so expensive in The Bahamas.

Before, governments could raise those taxes as much as they felt like.

The people would not complain or protest because those taxes were not on their bills.
They were hidden.

We want to encourage shopping at home.

We want that money to stay here and not go abroad.

Dr.

The Hon.

Hubert A. Minnis, Prime Minister Regional comparisons show that The Bahamas will continue to have the lowest VAT rate in the Caribbean.
Barbados St. Kitts and Nevis Jamaica Antigua and Barbuda Caribbean Average St. Lucia Trinidad and Tobago The Bahamas *below the regional average 17.5% 17% 16.5% 15% 15% 12.5% 12.5% 12% I R E G O N A L T A X C O M P A R I S O N VAT COLLECTIONS YEAR REVENUE ($) 2014/15 Actual 219,680,224 2015/16 Actual 628,051,966 2016/17 Actual 638,173,864 2017/18 Budgeted 663,561,987 2018/19 Budgeted 1,061,911,862 / THE MINISTRY OF FINANCE 9 9 “We recognise that any tax increase will have a particularly strong impact on poorer Bahamians.
Hence the move, within the context of the budget, to remove the VAT on breadbasket items and other major consumption costs like electricity and other utilities.” The Hon.

K. Peter Turnquest, Deputy Prime Minister & Minister of Finance VAT Removed from the Breadbasket Returning Savings to the Pockets of the Most Vulnerable “Growing up on grits and steam mackrel or fire engire is a part of life.

For some, eating bread and mayonaise was a necessity for survival.
We do not want Bahamians to be financially constrained to eat from the current breakbasket but that is a reality for some and it is nothing to scorn.

With the VAT reductions on the longstanding breadbasket, the most vulnerable, will find relief.” The Hon.

K. Peter Turnquest, Deputy Prime Minister & Minister of Finance After a period of public education, the government plans to reshape the breakbasket to include more healthy options, and lower the cost of adopting a more holistic lifestyle.
The Ministry of Health is currently engaged in an active consultative process intended to sensitize Bahamians about healthy food choices.
VAT FREE GROCERIES • Butter • Cooking Oil • Mayonnaise • Grits • Cheese • Corned Beef • Tuna • Mackerel • Mustard • Sardines • Other canned fish • Evaporated Milk • Margarine • Rice • Flour • Bread • Tomato Paste • Fresh Milk • Baby Cereal • Baby Formula • Soup • Broths • Baby Food • Powdered Detergents • Condensed Milk • Soaps Many of the Government’s tax relief measures are intended to cushion the impact of tax reform measures on the poorest households.
The Budget also reduces the cost of other goods and services through tax relief.

FOR INDIVIDUALS • Personal travel exemption increased from $300 to $500 per person twice a year • VAT eliminated from: 1.

Breadbasket items 2.

Prescription and over-the-counter medication 3.

Residential electricity bills kept at or under $200 per month 4.

Residential water bills kept at or under $50 per billing cycle 5.

Residential property insurance • Duty concessions: 1.
Duty eliminated from art supplies, upon application 2.

Duty eliminated from grocery items, including whole salmon, frozen fish fillets, bread spreads, potato products, tofu and prepared and preserved tomatoes.

3.
Duty reduced to 25% on fabric softener FOR BUSINESSES • Business license concessional rate of 0.75 per cent granted to smaller hotels (in line with existing rate for large hotels) • Business license waiver for schools registered with the Ministry of Education • VAT Free fundraising activities held by charitable organizations • Duty eliminated for church buses less than eight years (increased from 3 year-old requirement to make it more affordable and include more churches) • Duty free entry for goods used in the commercial printing industry PERSONAL TRAVEL EXEMPTION INCREASED FROM $300 TO $500 PER PERSON TWICE A YEAR 10 10 THE MINISTRY OF FINANCE / Reducing & Managing THE COST OF GOVERNMENT 23 SOEs account for 15% of total expenditure.
SINKING FUND Paying down the debt A sinking fund is a special interest- bearing investment fund that is formed by periodically setting aside money for the gradual repayment of a debt.

Instead of continuing to refinance existing debt obligations, which prolongs interest payments, the money set aside in a sinking fund helps to pay down on the debt.

The Government has two existing sinking funds to retire debt.
The budget sets aside $46 million, which includes $6 million in contributions to the existing sinking funds, and $40 million to invest in a new sinking fund to pay off a significant portion of the $750 million it borrowed in FY2017/18 when that debt becomes due in 2028.
DIGITAL BAHAMAS Modernising government and improving efficiency The Budget provides $8 million for the “Digital Bahamas” initiative, designed to transfer more government services online, to streamline government processes and to improve the ease of doing business in a variety of ways.
PUBLIC FINANCIAL MANAGEMENT REFORM Fostering transparency and accountability The Government launched an IDB- funded project to upgrade its financial processes and accounting systems, including a planned moved from cash- based to accrual-based accounting.

The Budget allocates $5 million to improve the hardware and software platforms for accountancy so the Government is able to keep comprehensive records, produce more timely information, and better track all government spending on an ongoing basis.
/ RATIONALISING STATE-OWNED ENTERPRISES Improving efficiency and reducing costs over time In the Budget, state-owned agencies (SOEs) account for15% of government expenditure.

The total allocation to SOEs only decreased by three per cent.
To improve efficiency and reduce the cost over time, the Government has directed each SOE to review its operating model and to develop a three to five year plan that could include a mix of revenue enhancement initiatives as well as measures to reduce expenditures bringing them in-line with industry benchmarks.
MAJOR INCREASES Increases for the Bahamas Public Parks and Beaches Authority, the Gaming Board, and the Bahamas Civil Aviation Authority were made in keeping with the Government’s right-budgeting policy which reverses the practice of underbudgeting for known commitments.

Right-budgeting was also applied to the Department of Public Health and the Public Hospital Authority.
However, the Government will also increase allocations for health agencies to improve the delivery of health care throughout the country and increase the allocation to BTVI to fund a scholarship initiative.

What is a state-owned enterprise (SOE)?

A state-owned enterprise (SOE), also known as a government-owned corporation, is a legal entity that is created by the Government in order to partake in commercial activities on the Government’s behalf.
It can be either wholly or partially owned by a government and is typically earmarked to participate in commercial activities.

They are separate from government agencies established to pursue purely nonfinancial objectives.
THE MINISTRY OF FINANCE State-Owned Enterprise The Clifton Heritage Authority The Antiquities, Monuments & Museums Corporation Broadcasting Corporation of The Bahamas Water & Sewerage Corporation Operation - College of The Bahamas Bahamas Technical & Vocational Institute National Sports Authority National Art Gallery Bah Agricultural/Food Safety Authority Bahamas Agricultural & Industrial Corporation School of Agriculture & Marine Operation - Public Hospital Authority Operation - Department of Public National Health Insurance Authority Operation - The Gaming Board Bahamas Civil Aviation Authority Airport Authority Operational Bahamasair Holding Ltd. Nassau Flight Services Hotel Corporation of The Bahamas National Training Agencies Bahamas Public Parks & Beaches Authority Straw Market Authority TOTAL 2018/2019 61% of SOEs saw reductions in their allocations or no change.
2018/19 ($MIL) 2.3 2.5 8.0 25.0 31.6 8.1 3.0 1.6 0.7 4.0 7.0 216.0 6.5 20.0 6.3 18.5 6.2 13.4 1.8 0.6 1.0 13.9 0.5 398.3 11 What the Law Says About Good Governance HOLDING THE GOVERNMENT ACCOUNTABLE The Fiscal Responsibility Bill, 2018 is a forward- looking piece of legislation intended to reshape the culture of public accountability, by enabling more Parliamentary and public scrutiny of the fiscal performance of the Government.
The law establishes six general principles of responsible fiscal management that the Government must live by.

5 Things You Need To Know Things will be different after the Fiscal Responsibility Bill, 2018 is passed.

If the government is irresponsible with public finances it will not simply be against standards of good governance, it will also be against the law.

Fiscal Balance The law will force the Government to live within its means.

The Government has three years to reduce its deficit.
From FY2020/21 onwards, the deficit can be no more than 0.5 per cent of GDP.

Spending Cap The law will cap government spending so that it cannot grow faster than the economy’s overall growth rate.

The average long-run growth in nominal GDP is currently 3 per cent which takes into account the historical and projected path.

Transparency The Government will have to produce new fiscal reports throughout the year for public and Parliamentary scrutiny.
These include a Fiscal Strategy Report, Fiscal Adjustment Plan, and a Pre-election Economic and Fiscal Update Debt Limit The law will limit government debt to a maximum of 50 per cent of GDP.

Fiscal Responsibility Council Civil society will be given legal powers of oversight through a Fiscal Responsibility Council.

Five professionals with specific expertise in law, business, economics, accounting, and finance will be independently selected by non- governmental stakeholders.
A publication of the Ministry of Finance Central Communications Unit mofcomms@bahamas.gov.bs / 6 General Principles for Responsible Fiscal Management Accountability: The Prime Minister, the Minister, all other Ministers and the heads of local governments are accountable to Parliament with respect to managing fiscal policies.
Inter-generational Equity: The management of fiscal policies of the Government shall take into account the impact on the welfare of the current population and future generations.

Responsibility: The management of public assets and liabilities, including natural resources and fiscal risks shall be conducted to maintain fiscal and environmental sustainability.

Stability: Fiscal policy shall be conducted in a manner that does not cause destabilizing changes in the macroeconomic and fiscal indicators.
Transparency: The roles and responsibilities of all government officials with respect to the management of fiscal policy are clearly established and defined; timely financial and non-financial information is made available so as to permit effective public scrutiny, and public officials and public office holders do not withhold financial or other performance information without lawful cause.

6 Inclusive Growth: Economic growth benefits the whole population.