A major factor in the election of political parties are the platforms on which they
campaign. Over the years all political parties have used slogans which parties feel will
catch the attention of the electorate. The platform is the mechanism that is used by
these parties to sell itself to the electorate. When elected, the political party enters a
contract to deliver the promises it made through its annual budgets. The budget is,
technically, a contract with the people.
The 21st Century ushered in a new kind of budget. Until the 2000s, The Bahamas
government’s main source of revenue was customs duties. The Customs Department
was the main revenue collector in the government. Customs duties was the basis for
Bahamians believing that we paid no taxes. We lived in an indirect system of taxation,
so 20th Century budgets centered around the level of excise duties the government
would place on various items, commodities, legislations and real estate.
During the budget presentations of the 20th Century, Bahamians would be on pins and
needles waiting to learn about duties — the high and low tariffs and what would be
reduced or increased. It was the era of water and lights. During the first half of the 20 th
Century, party politics was non-existent, and representatives were evaluated on the
basis of what they could get for their constituencies, hence the water and lights
approach or the building of a new dock or how much road work one was able to get for
the people. In the Family Islands, road work meant cracking rocks to make roads.
In the ’50s, party politics reared its head with the formation of the Progressive Liberal
Party (PLP) and a few years later, the United Bahamian Party (UBP). With party politics
a different kind of budget was introduced; however, customs duties remained the
foundation of the budget.
In the ’90s, the world changed with the establishment of the World Trade Organization
(WTO) and the introduction of Trade Liberalization which would eventually lead to the
reduction of customs duties as the main ingredient of revenue source.
Prime Ministers Ingraham and Christie had to introduce a budget that was no longer
customs duty centered because the revenue base of The Bahamas was in transition, as the country was entering a new economic development phase. It is in this scenario that
the government had to engage in borrowing in order to provide government services to
the people of The Bahamas. This caused the national debt to increase. The national
debt would plague The Bahamas over the first two decades of the 21st Century. The
Bahamas had reached a point where debt serving had surpassed education, healthcare
and national security as a priority item in the budget. It was during this period that
Inland Revenue became a dominant player in revenue collection, as the importance of
customs duties receded into second or third place as the revenue source.
The Trade Liberalization policy of the WTO was oriented towards the development of a
global economy based on the elimination of barriers to trade. The whole world was
committed to the reduction of customs duties which was one of the main barriers to
trade, so The Bahamas had no choice but to reduce duties.
The Christie Administration had no choice but to find a new way of generating revenue
other than the route of income tax. Value Added Tax (VAT) was the avenue to a new
source of revenue generation.
The gap between the administration of Prime Minister Christie to that of Prime Minister
Davis was eight years. It has taken that period to develop a balanced budget in
2024/2025. One of the goals of the Davis Administration in the 2025/2026 Budget is to
accelerate the paydown of the national debt which has been a millstone around the
neck of the Bahamian economy.
The Davis Administration has lived up to its contract with the Bahamian people. For
me, debt reduction and better ratings with the rating agencies have been big gains for
the government. Further, there are major benefits for the Bahamian people.
