Bahamas government unveils tax-free budget to parliament

The Bahamas government has introduced a tax-free budget of US$3.54 billion to Parliament, with Prime Minister Phillip Davis emphasizing that many elements of this fiscal plan build upon the initiatives his administration has enacted since taking office in 2021.

Prime Minister Davis informed legislators that the projected revenue does not include a reimbursement of US$75 million from the Grand Bahama Port Authority (GBPA). He asserted that the total amount owed to the government by the GBPA is US$357 million.

The total expenditure is projected to be US$3.61 billion, with recurrent expenditure accounting for US$3.27 billion and capital expenditure amounting to US$344.5 million.

Davis stated that the fiscal deficit is estimated at US$69.8 million, or 0.5 percent of GDP, while the primary balance shows a surplus of US$586.9 million, or 3.9 percent of GDP. Consequently, the debt-to-GDP ratio is projected to be 75.3 percent by the end of the 2024-25 fiscal year.

Prime Minister Davis highlighted the recent launch of Cloud Bahamas, the new Government Enterprise Resource Planning (ERP) Application, which is set to modernize public service operations.

“This ERP will revolutionize public service business operations,” he said. “Previous administrations implemented a series of financial legislations with reporting obligations that couldn’t be met with the existing financial systems. While we refrain from speculating whether this was an intentional oversight, complaints about missed deadlines under such conditions are not credible. Hence, we focused on finding a solution rather than getting distracted by the noise.”

Beginning January 2025, Cloud Bahamas is expected to bring significant changes and innovations to the public sector, allowing for improved financial reporting, including a public sector income statement and balance sheet. Davis emphasized the necessity for better financial reporting and the benefits of reducing public sector operating costs.

Prime Minister Davis reiterated his government’s commitment to reducing the overall tax burden on ordinary Bahamians, focusing on tax efficiency and enforcement. He noted that the current budget does not introduce new taxes, although there are adjustments to fees for government services where the cost of provision has risen.

“By prioritizing this focus, we have achieved positive results. The revenue-to-GDP ratio has grown from 18.7 percent at the beginning of our term to 20.4 percent in the most recent fiscal year, 2022/23. We will continue on this path to achieve our medium-term revenue target of at least 25 percent of GDP.”

Davis outlined the four main priorities of the fiscal package’s revenue measures: enhancing the well-being of Bahamians and creating opportunities, increasing revenue from foreign direct investment, addressing the revenue underperformance of VAT on real estate transactions, and developing an equitable and competitive business environment.

A key policy priority for the government is to support new opportunities for Bahamians and incentivize their participation in a growing economy.