Last year, Peter Turnquest, Deputy Prime Minister and Minister for Finance said that accrual-based accounting could have anticipated many of the deficiencies of the government's first budget in 2017.
Turnquest stated then that the cash-based accounting system presently in use unwittingly aided in concealing an excess of payment arrears that twisted the government's statistics on spending. He blamed the former administration of utilising this concealment to 'present a false picture of the fiscal position.'
However, Turnquest and Johnson recently endeavoured to defend the government's $240 million revenue shortfall, insisting that those forecasts are simply forecasts and the central thing to contemplate should be reducing the deficit.
'One of the things I think is fundamental is that GDP growth projections are exactly that, they are projections,' said Turnquest, as he answered questions throughout the annual budget news conference.
'Unless you have a crystal ball that's a little better than my crystal ball, it's very difficult to pinpoint the number. We make these projections based upon factors that we are aware of in the global economy, that are happening in our marketplace with our major sectors of our economy and based upon the plans and the investments that we are aware of. Any number of factors can affect and slowdown that growth profile.'
'…In The Bahamas, we have been benefitting from a very robust tourism sector and that is driving the growth for the most part, but one of the things I'm particularly proud of in this last GDP report is the fact that the growth that we've had has been private sector led…GDP growth is a factor of many things. It's not only internal economic factors but also external economic factors and they all play a role in achieving your results.
'The main thing though is to look at that bottom line and this year when you look at that deficit number coming in at our target that means that we are doing a fair job in managing the fiscal affairs of this country,' Turnquest said.
Likewise, Johnson declared that with the job of fiscal management being to control the deficit, the budgetary forecasts are just that.
'I saw the headline about missing the revenue target and that is something important, but what really ultimately is important is making sure that you meet your fiscal goals with respect to deficit targets, your debt targets and the like because that really is the determinant of fiscal stability and fiscal success,' he stated.
As Turnquest presented the 2019/2020 budget statement, he noted that revenue is predicted to come in at about $2.4 billion, some $238 million, or 9 percent, less than what was estimated at the commencement of the fiscal year.
Turnquest noted that this was principally due to the new arrangement with the gaming operators, the stalled implementation of the Revenue Enhancement Unit (REU) and the concessions given to contractors and resorts in respect of the initiation of the higher percentage of Value Added Tax (VAT).
Notwithstanding the revenue forecast shortfall, forecast revenue increased by $373 million in the 2018/2019 fiscal year, driven by an increase in VAT collected.
'For a number of years and for a number of reasons we have been relatively lax, some may say slack in the enforcement of the tax laws,' Turnquest said. 'And that has had its effect on overall results and the build-up of all the arrears and all the debt that we have.'
'Each of us as citizens have an obligation to pay our fair share,' He continued. And 'that while The Bahamas doesn't have an aggressive tax scheme, it is ordinarily the class of residents who have more, who don't pay their taxes.'
'Again, this is not a punitive exercise, this is not a 'gotcha' exercise, this is very much a partnership where the government does its part and the citizens do their part and together we get the positive result from each of us following the rules that we anticipate are needed as a society,' Turnquest said.