06062018 business

business@tribunemedia.net

WEDNESDAY, JUNE 6, 2018

$4.75

$4.82

BCA: VAT hike to shut 40% of construction sector

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

T

HE VAT rate hike will force 30-40 percent of Bahamian contractors out of business, the government was warned yesterday, while reducing this nation to “a tourism-only economy”.

Leonard Sands, the Bahamian Contractors Association’s (BCA) president, told Tribune Business that the 60 percent VAT rate hike would likely slash construction sector activity by 70 percent compared to when the tax was first introduced in 2015.

Warning that a 12 percent VAT would undermine an industry he described as the Bahamian economy’s “third pillar”, Mr Sands said the proposed increase threatens to have “a negative ripple effect” by increasing

* BCA chief: ‘we’ll be tourism-only economy’ * Forecasts business fall to 30% of pre-VAT * Warns govt undermining own housing plan

LEONARD SANDS costs throughout the length of the construction industry’s supply chain.

Given that VAT is a regressive tax ultimately paid by the end-consumer, the BCA chief said increased construction costs would

further reduce the number of qualifying buyers in an already-compressed mortgage market where banks remain reluctant to lend.

Pointing out that the Association had “charted” VAT’s impact since its arrival on New Year’s Day 2015, Mr Sands warned of a “chain reaction” from increased construction costs reducing mortgage access and real estate affordability - especially for new builds - and leading to a further slowdown in economic activity.

“The significant negative impact it will have is so much concerning,” the BCA president told Tribune Business of the proposed 60 percent VAT hike. “It will

have a ripple effect. Going to 12 percent is going to reduce the number of people qualifying for mortgages to such a small number we could probably see 30-40 percent of contractors in the construction sector shut their doors because they don’t have enough activity to keep them in business.”

Mr Sands estimated that eight out of every ten persons in The Bahamas was “touched” by each dollar spent in the construction industry. “When you constrict that, that dollar will circulate to less than half of those people,” he said of a 12 percent VAT, “because it is

SEE PAGE 4

$4.91

$4.82

Developer: ‘millions on the line’ through VAT structure alter

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A PROMINENT Bahamian developer yesterday warned “millions of dollars are on the line” through budget tax changes that make it “impossible” for real estate projects to claim back VAT. Jason Kinsale, president of Aristo Development, told Tribune Business there was “no way” he and other property developers can absorb 12 percent VAT on their development’s costs after the government reverted to the old “transfer tax” structure.

The former Christie administration changed the ten percent Stamp Duty levied on real estate sales to accommodate the current VAT rate, splitting this 7.5 percent/2.5 percent between VAT and Stamp Duty.

But the 2018-2019 budget goes back to the ten percent

* ‘IMPOSSIBLE’ TO CLAIM INPUT TAX * THREATENS BUYER COST INCREASE * SECTOR NEEDS END TO ‘SHOCKWAVES’

JASON KINSALE stamp duty on all real estate purchases over $100,000.

KP Turnquest, deputy prime minister, said this was intended to “create a simpler formula” for real estate transactions by eliminating the VAT component.

SEE PAGE 4

Fiscal hawk: reject Gov’t financial systems 80% below maximum * IDB: still less than ‘global standard’ IMF on revenue ratio * ‘Limited improvement’ under former govts

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas was yesterday urged by a well-known “fiscal hawk” to strive for the “lowest revenue ratio in the Caribbean” and reject the IMF and credit rating agencies’ advice.

Rick Lowe, an executive with the Nassau Institute think-tank, told Tribune Business that the lowest ratio of revenue-to-GDP was “a good goal to have” in trying to place The Bahamas’ finances bank on a

* LOWEST IN REGION IS ‘GOOD GOAL’ TO HAVE * WARNS OF HARSHER MEDICINE IF WOES NOT TACKLED * AGREES VAT RISE ‘A KILLER’ AND ‘REALLY SOUR NOTE’ sustainable path.

Arguing that the size of government, and the

SEE PAGE 5

$400m extra VAT ‘more than risky’

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

THE Government’s forecast of $400m in extra VAT revenues is “more than risky”, the Exuma Chamber of Commerce’s president warning: “I can almost guarantee it won’t happen.”

Pedro Rolle yesterday

* CHAMBER CHIEF ‘ALMOST GUARANTEES IT WON’T HAPPEN * FAMILY ISLANDS WILL FEAR RATE RISE MORE * DEPRESSING CONFIDENCE AS EXUMA GROWING SEE PAGE 5

THE government’s financial management systems remain “below global standard” and have seen “limited improvement”, scoring 80 percent below maximum in their last assessment.

An Inter-American Development Bank (IDB) report on The Bahamas’ “fiduciary systems”, accompanying the 20182019 country strategy for this nation, backs assertions by KP Turnquest, the deputy prime minister, that a $33m project to overhaul an area overseeing fiscal

consolidation efforts had been “floundering”.

Using its PRODEV Evaluation Tool, the IDB said The Bahamas had secured “a marginal overall improvement” in the quality of its financial management systems between 2009 and 2013. However, this nation’s score had only improved from 0.8 to 0.9 out of a maximum “five” based on its performance across five areas.

These were listed as Results-Based Planning; Results-Based Budgeting; Public Financial

Management; Programme and Project Management; Monitoring and Evaluation. The Bahamas fared somewhat better on “public financial management”, where its score improved from 1.9 in 2009 to 2.3 in 2013.

“The current Public Financial Management technological platform is outdated, lacks integration, and difficult to maintain,” the IDB report said, while referring to the “new business model” that the government intends to adopt.

The Minnis administration has committed to transforming The Bahamas’ governance and fiscal management systems through wide-ranging legislative reform, which includes the implementation of an e-procurement platform designed to address tendering system weaknesses identified by the IDB. “Budget processing has seen limited improvement during the previous country strategies,” the IDB report revealed. “The absence of

SEE PAGE 6

PAGE 2, Wednesday, June 6, 2018

THE TRIBUNE

THE TRIBUNE

Wednesday, June 6, 2018, PAGE 3

$6M TOUR OPERATOR TO CREATE 70 JOBS

NASSAU Flight Services held a Client Appreciation Cocktail Reception at Balmoral Club. At centre/front is minister of tourism and aviation, Dionisio D’Aguilar; centre front/second left, parliamentary secretary in the Ministry of Tourism & Aviation, Travis Robinson; centre/back, chairman Howard “Rickey” Mackey; and Nassau Flight Services manager, Ricardo Rolle, at left.

Nassau Flight Services privatisation ‘six to eight months away’ from end THE GOVERNMENT’S bid to privatise Nassau Flight Services (NSF) is “probably six to eight months away from coming to a conclusion”, a Cabinet minister has revealed.

Dionisio D’Aguilar, minister of tourism and aviation, said the potential sale of the government-owned ground handling provider will be open to Bahamian investors only.

Addressing a recent Client Appreciation Cocktail Reception at the Balmoral Club, hosted

by Nassau Flight Services, Mr D’Aguilar said: “It is our fundamental belief that the private sector, in the hands of Bahamians, will serve the customers better; would bring about significant investment in Nassau Flight Services; will allow it to be more profitable; and will result in more modern equipment and improved services.

“The private sector is more nimble, and is better

able to react to the changing markets. So this government wants to change a policy that has been in effect for many years, which is the government has to run everything and that is why we are moving in that direction.”

He added: “The government has expressed an interest in seeking to put into the hands of Bahamians companies that are presently in the hands of the government. And so we are going to explore this privatisation process. The accountants are looking at it, they are coming back to us with an evaluation, and then it has to go to Cabinet to see whether we can get approval for it.

“Once we have that, then we will open it up to Bahamians – only Bahamians - to apply if they would like to invest in Nassau Flight Services; to rejuvenate, to reinvigorate, to reinvest in Nassau Flight Services to allow for its rebirth.”

Mr D’Aguilar said a

NASSAU Flight Services chairman, Howard “Rickey” Mackey.

key component in any privatisation is to ensure NFS employees “are taken care of”, and that they and clients “are not disrupted during this process”.

“We would want to ensure that the employees of NFS are protected, are cared for, are looked after as a part of this process,” he added. “I don’t want anyone to be unduly concerned. Of course change is always of concern, but we are very mindful that we want to do something that causes the least amount of stress for the employees.

“Rest assured we are very mindful of ensuring that you, the employees, and you, the customers, are not disrupted during this process.”

Nassau Flight Services has been in existence since 1957. As a ground handling company, it provides planning and management, passenger services, aircraft services and ramp handling, cargo services and

MINISTER of Tourism & Aviation, Dionisio D’Aguilar.

VIP services at Lynden Pindling International Airport (LPIA).

A $6M TOUR operation will create 70 jobs within its first year when it begins to expose Eleuthera to thousands of tourists from 2019 onwards.

Tourism Adventures plans to launch a fast ferry that will take 500 guests per day from Nassau to Eleuthera in one hour.

Tyrone Sawyer II, the company’s chief operating officer, said: “Tourism Adventures will provide an authentic out island experience to the island of Eleuthera. Tourists, especially cruise passengers, will have the opportunity to take a fast ferry able to travel at 48 knots per hour and still make it back to Nassau in one day.”

Tourism Adventures plans

to cater to children through partnering with Jemima’s Playhouse, an education and entertainment company that was developed by Mr Sawyer and his wife, Jemima.

Jemima’s Playhouse services pre-schools and elementary schools in Texas, Nebraska, Missouri, Kansas and Georgia, using characters such as BahamaMan, Señor Burro, Madame Belle and Waste-a-tron to teach students ethics and social responsibility.

“The children will be able to shoot marbles, spin the top, hop scotch, get fresh bread out the oven and dance with BahamaMan,” Mr Sawyer said of Tourism Adventures.

PAGE 4, Wednesday, June 6, 2018

THE TRIBUNE

Developer: ‘millions on the line’ through VAT structure alter FROM PAGE ONE Mr Kinsale, though, warned that the government’s move will have the likely-unintended consequence of increasing real estate costs for both Bahamian and international buyers as developers can no longer offset their “input” VAT. He explained that developers currently “net off” the VAT they pay on construction materials, and the likes of contractor, engineer and architect bills, against the “output” tax whenever a property is sold.

The Aristo chief said the budget’s altered tax structure, by eliminating VAT, robs developers of the ability to claim back already-paid input tax, thus saddling them with a multi-million dollar increase in development costs that will likely be passed on to buyers.

“The VAT is supposed to be a pass through,” said Mr Kinsale, who has

To advertise in The Tribune, contact 502-2394

spearheaded the development of projects such as the Balmoral Club, ONE Cable Beach and THIRTY-SIX on Paradise Island. “Our concern is that they’re going back to the old stamp tax regime they had prior to the 7.5 percent VAT in 2015, and there’s no ability to claim the VAT back.

“The issue we have is that we don’t have the ability to make the claim. If you put 12 percent VAT on a $50m project, you have to spend $6m in VAT. When you convey and sell is when you submit the receipt to the VAT Department to claim back the VAT, but now there’s no way to claim the VAT back.

“I don’t know if this is an oversight or they didn’t pick it up with regards to the development industry. But there’s no possible way we can absorb 12 percent and not be able to claim it back.

It’s impossible. It’s a difficult enough business as it is.”

Mr Kinsale warned that the increased VAT exposure, coupled with the unease caused by the 60 percent hike in its rate, could deter himself and other developers from undertaking further projects given the increased costs they will have to bear.

Obtaining the necessary financing would also be more difficult and costly, the Aristo chief explained, thus creating a further obstacle to real estate development at a time when The Bahamas needs fresh inventory to meet growing demand from both the local and international markets.

Urging the government

to provide “some clear answers” to address developer concerns, Mr Kinsale also expressed concern about the frequent annual budget tax changes that impacted market certainty and predictability.

He told Tribune Business: “I’d like to give them the benefit of the doubt, but we have major projects ongoing. We’ve got exposure, and every single time we’re in the middle of a project something changes.”

Mr Kinsale pointed to previous “transfer tax” changes, and the impending increase in the permanent residency qualification threshold to $750,000, as examples of government tax/fee policy changes that have impacted the real estate industry.

“That can’t keep continuing on every project,” he said. “We’re in a fragile economy as you know. I feel the Bahamian market is improving a bit, and we don’t need any more shockwaves.

The developers need to feel confident, and if they don’t feel confident there’s nothing for the realtors to sell.

“We need nice new product to attract permanent residents to come here. I don’t see any way to claim [VAT back]. That’s our concern. Until we see that it’s extremely difficult to finance, justify any project. It doesn’t make sense.

“It’s very concerning; extremely concerning. It’s top of mind right now. We need some clear answers on how it’s going to be resolved. This isn’t something we can transition to. It

doesn’t make sense.”

Mr Kinsale urged the government to leave the real estate “transfer tax” “the way it is”, adding: “I don’t understand why it has to be changed.” Failing that, he suggested that real estate either be treated as “exempt” or zero-rated.

Warning that an immediate solution was required, the Aristo chief told Tribune Business: “It’s critical. There has to be a solution. It has to happen now. We can’t have any more uncertainty. We need to feel confident. Millions of dollars are on the line with these projects.

“We have to believe the rules will not change all the time. I give them the benefit of the doubt, and that this was an oversight, but we need this resolved now.

Development is a pretty important component of the economy.”

Mr Kinsale added that real estate developers were also being “penalised” by being forced to carry VAT costs for up to three years until they began to sell their projects.

“Right now we’re being penalised and told we have to wait three years to get the VAT back,” he told Tribune Business. “We’re being penalised right away as we cannot claim for three years.

“Why should we be be able to do that when everyone else is able to claim monthly? It’s really hindering us. Coming up with millions of dollars to carry VAT make no sense when no one else is doing it.”

NOTICE UBP FINANCE (BAHAMAS) LIMITED NOTICE is hereby given as follows: (a) UBP Finance (Bahamas) Limited is in Voluntary Dissolution under the provisions of Section 138(4) of the International Business Companies Act 2000. (b) The Dissolution of the said Company commenced when the Articles of Dissolution were submitted to and registered by the Registrar General of the Commonwealth of The Bahamas. (c) The Liquidator of the said Company is Rochelle Cleare, Nassau, N.P., Bahamas.

Dated this 6th June 2018.

ESTATE OF

VERNITA BEATRICE JOHNSON TAKE NOTICE that anyone having a claim against the Estate of VERNITA BEATRICE JOHNSON late of Bay Cedar Close, Sea Breeze Estates, Nassau, Bahamas, who died on 1st August, 2017, may submit such claim in writing to the law firm of MAILLIS & MAILLIS, Chambers, Fort Nassau House, Marlborough Street, Nassau, Bahamas, tel: (242) 322-4292/3, fax: (242) 323-2334 ON OR BEFORE the 6th September, A.D., 2018.

Rochelle Cleare Liquidator

NOTICE

NOTICE

HARBOUR TRADE ASSOCIATES LIMITED

BALMORAL GLOBAL LIMITED

N O T I C E IS HEREBY GIVEN as follows:

N O T I C E IS HEREBY GIVEN as follows:

(a) HARBOUR TRADE ASSOCIATES LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.

(a) BALMORAL GLOBAL LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.

(b) The dissolution of the said company commenced on the 29th May, 2018 when the Articles of Dissolution were submitted to and registered by the Registrar General.

(b) The dissolution of the said company commenced on the 31st May, 2018 when the Articles of Dissolution were submitted to and registered by the Registrar General.

(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas

(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas

BCA: VAT HIKE TO SHUT 40% OF CONSTRUCTION SECTOR FROM PAGE ONE no longer being spent as much. Less than half the people will be touched by that money.

“If we do this we can look forward to a really concerning situation where we have a level of inflation, less economic activity related to construction, and you will see more unoccupied homes on the landscape... The landscape is going to look different because the level of construction is not going to be 65 percent of what it was before the advent of 7.5 percent VAT,” the BCA chief continued.

“VAT at 7.5 percent pushed some people beyond the capability to get a mortgage. Now it’s going to 12 percent, that group is going to expand. We’re going to get to a place where the level of construction activity in the country is as low as 30 percent” compared to pre-VAT days.

Describing projections of such a decline as “real”, Mr Sands said higher construction costs would impact other key sectors - including real estate and foreign direct investment (FDI) - in what is already a high-cost economy.

Residential housing construction is the “bread and butter” for most smaller Bahamian contractors and their sub-contractors, and the BCA president warned that the VAT hike’s impact on his industry alone may be enough to “stall” the economy given its importance as “the third pillar”.

“A lot of things ripple from that,” Mr Sands reiterated.

“The only thing we’ll go back to is the 1980s when we were a tourism-only economy.

That’s what we’re going to be staring at; a tourism-only economy.”

The Minnis administration came to office facing a difficult balancing act between trying to facilitate economic growth while, at the same time, eliminating annual fiscal deficits of more than $300m. While many Bahamians, especially in the private sector, back the 2018-2019 budget’s objectives, they feel the pendulum has shifted too much towards fiscal consolidation Mr Sands’ concerns illustrate the extent of individual industry concerns over the proposed VAT rate rise, which is projected to suck an additional $400m out of the economy in the upcoming fiscal year.

VAT is a regressive consumer tax, imposing a disproportionate burden on

lower income Bahamians who spend a higher percentage of their income on consumption. Increasing the rate to 12 percent has produced fears of a reduction in consumer demand, as persons adjust to higher prices and lower living standards and disposable incomes, resulting in lower economic growth - and possibly a new recession.

The government, though, believes it has little choice but to increase VAT if it is to end 45 years of post-independence deficit spending in every budget year. With the national debt now near $8bn, it is caught between the “rock” of $360m in unfunded arrears and trying to meet the Fiscal Responsibility Bill’s target of a 0.5 percent GFS deficit by 2020-2021.

Amid private sector concerns that the magnitude of the fiscal correction is too much for the economy to bear, the government appears to be banking on The Bahamas’ key external drivers - higher tourism numbers and the foreign direct investment (FDI) pipeline - combined with Baha Mar’s opening to keep the economy moving forward and offset the VAT rise.

Mr Sands, meanwhile, told Tribune Business that the government was threatening to undermine its very own low-cost housing initiative, designed to enable more Bahamians to “own a piece of the rock”, with a 12 percent VAT. “I think it will have an extremely negative impact on the government’s housing initiative,” he told Tribune Business. “With the cost of everything relating to construction going up. you can’t afford to get a lot of the materials and services.

“At 12 percent you’re paying an additional 4.5 percentage points more. It doesn’t put you in a better position. This taxation, while grabbing more of the Bahamian people’s money, doesn’t bring more in.”

Mr Sands, who initially was the FNM’s Bain and Grant’s Town candidate for the 2017 general election before withdrawing, expressed scepticism that the VAT increase will deliver the $400m revenue rise that the government is seeking.

“More of your money is being diverted to pay taxes,” he explained. “This constricts your economy. It gets smaller.

It doesn’t expand. The same thing that you’re trying to avoid you could achieve the wrong way by over-taxing.”

NOTICE OF DISSOLUTION Pursuant to the provisions of Section 138 (8) of the Intemational Business Companies Act, (as amended) NOTICE is hereby given that Ocean Overseas Ltd. has been dissolved and has been struck off the Registar effective May 24,2018.

_________________________________ Bukit Merah Limited Liquidator

_________________________________ Bukit Merah Limited Liquidator

Cameron Carey and Collonna Hepburn LIQUIDATORS c/o Bamont Trust Company Limited Bahamas Financial Centre, 3’d Floor Shirley & Charlotte Streets P.O. Box SS-6373 Nassau, Bahamas

NOTICE

NOTICE

NOTICE

ELCANTA HOLDINGS LIMITED

RADEON HOLDINGS LIMITED

LEADING PIONEER LTD.

Dated this 6th day of June, A. D. 2018

Dated this 6th day of June, A. D. 2018

N O T I C E IS HEREBY GIVEN as follows:

N O T I C E IS HEREBY GIVEN as follows:

N O T I C E IS HEREBY GIVEN as follows:

(a) ELCANTA HOLDINGS LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.

(a) RADEON HOLDINGS LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.

(a) LEADING PIONEER LTD. is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.

(b) The dissolution of the said company commenced on the 30th May, 2018 when the Articles of Dissolution were submitted to and registered by the Registrar General.

(b) The dissolution of the said company commenced on the 29th May, 2018 when the Articles of Dissolution were submitted to and registered by the Registrar General.

(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas

(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas

Dated this 6th day of June, A. D. 2018

Dated this 6th day of June, A. D. 2018

(b) The dissolution of the said company commenced on the 30th May, 2018 when the Articles of Dissolution were submitted to and registered by the Registrar General. (c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas Dated this 6th day of June, A. D. 2018 _________________________________ Bukit Merah Limited Liquidator

_________________________________ Bukit Merah Limited Liquidator

_________________________________ Bukit Merah Limited Liquidator

THE TRIBUNE

Wednesday, June 6, 2018, PAGE 5

Fiscal hawk: reject IMF on revenue ratio FROM PAGE ONE spending needed to support it, were the root cause of The Bahamas’ problems, Mr Lowe said the government’s objective should not simply be to please external agencies.

“That’s a good goal to have; to be the lowest taxed in the region,” he told this newspaper. “Our goal is not to be what the IMF wants us to be. Our goal is to do it right. Our goal is not to get into a difficult fiscal position.”

Mr Lowe was speaking after well-placed government sources said the IMF, and both Moody’s and Standard & Poor’s (S&P), frequently expressed concern that The Bahamas’ tax revenue intake was among the lowest in the region as a percentage of GDP. The issue was highlighted

by KP Turnquest, deputy prime minister, in unveiling the 2018-2019 budget.

He said the 60 percent VAT rate hike, and the $400m in additional revenues that will generate, are key to bringing The Bahamas’ revenue-to-GDP to 20.1 percent in the upcoming fiscal year - a ratio more in line with the Caribbean average.

Mr Turnquest said it was a “pressing concern” that revenues for the 2017-2018

fiscal year were projected to come in $130m below forecast despite a 1.4 percent GDP expansion, and argued that this justified both the increased taxes and enhanced compliance/ enforcement measures.

“The bottom line is that the yield of our revenue system, at 16.1 percent of GDP in 2017-2018, is well below the revenue yields found elsewhere in the region, where yields average in the area of 25 percent of GDP, and certainly is inadequate to the needs of a modern government,” the deputy prime minister said.

Besides Mr Lowe’s rejection of such an argument, others - including Gowon Bowe, the Bahamas Institute of Chartered Accountants (BICA) president - have pointed out that the 16.1 percent revenue ratio is the direct result of last year’s upward revision of Bahamian GDP to an $11bn economy.

Mr Lowe, who first warned about the build-up in The Bahamas’ national debt in 2001 when it was less than $3bn, said the Minnis administration deserved credit for being the first government to properly “level” with the Bahamian people on the dire state of the public finances.

Praising it for at least trying to enact muchneeded reforms, he said it

was better for The Bahamas to endure harsh austerity measures now than have even more bitter medicine forced on it by the likes of the IMF should the fiscal slide continue.

“We knew it was coming,” Mr Lowe told Tribune Business. “How and when we didn’t know, but it’s better now than down the road when it would be even worse. The trends were all in the wrong direction. It’s better to try to deal with it now than fall off the ledge completely and be forced to do things even worse.”

Suggesting that the government’s strategy had created “some light at the end of the tunnel”, he argued that “the proof of the pudding is in the eating” and that it must deliver on the promised improvements in the fiscal position to maintain the Bahamian people’s confidence.

“I think the VAT increase is a killer; it’s a really sour note,” Mr Lowe conceded.

“But obviously this stuff has to be dealt with. The $360m arrears and the unbudgeted things they didn’t put in the budget, it’s unconscionable.

It’s just unreal.

“The country is in bad shape and we knew it was getting worse. At least we can see it. I think they’re [the government] being sincere. How it works out is the question. If economic

growth happens in spite of this they can recover sooner rather than later.

“The difficult thing is how you grow this economy, and I don’t think they have enough trust in their own numbers to say the economy will grow with less taxation. The danger is that it’s going to slow the economy even further.”

Mr Lowe expressed concern that the budget failed to mention Business Licence reform, and warned the government against continual “hammering” of the private sector with new and/or increased taxes.

“There’s too much against the business community, and they need the business community to be profitable to generate the taxes they require,” he told Tribune Business. “They can’t keep hammering and keep hammering.

“If I had a wish, I just wish they wouldn’t raise VAT. When these tax systems are put in place, it’s inevitable they raise them.

It’s a vicious circle; there’s so much piled up against them and us as taxpayers.”

Mr Lowe also called upon the government to show the same “tenacity” on curbing spending as it had in increasing the VAT rate.

“Spending is the problem and we’ve been continually growing the government for

$400m extra VAT ‘more than risky’ FROM PAGE ONE told Tribune Business that the 60 percent VAT rate hike’s impact will be felt more heavily across the Family Islands, where additional shipping costs and volumes/economies of scale typically result in higher prices and living costs.

Joining the chorus of those “sceptical” as to whether a 12 percent VAT will yield a matching increase in gross revenues to $1.061bn, Mr Rolle said the move was likely to depress investor confidence and consumer spending following an 18-month period of “strong growth” for Exuma’s economy.

Giving an insight into the tax increase’s implications beyond Nassau, he revealed: “It’s difficult to reconcile that they came out with such a drastic rate increase.

“The first thing it does, the very first thing that happens, is it depresses the enthusiasm for investment, and Exuma is highly dependent on investment.

I think we’ve been growing because of the opportunity for investment in Exuma.

“The past seven years have seen gradual growth.

Over the last year to yearand-a-half, growth has really been strong and encouraging in terms of construction and projects being pushed. It’s really been a positive economic environment,” Mr Rolle continued.

“The challenge we face is this 12 percent weighs heavily on the cost of real estate.

It’s going to cause people to have second thoughts...

Straight across the board, it’s difficult to see how this does not negatively impact the economy of Exuma.”

Mr Rolle suggested the likely VAT-induced

economic slowdown will, in turn, reduce Exuma’s contribution to the Public Treasury. “I don’t see how it’s an increase in terms of the government achieving its goals,” he told Tribune Business.

“It’s not as if one can say we were collecting $10m for Exuma and now we’re collecting 60 percent more. It doesn’t take into account human nature. I think it’s more than risky. I don’t think they’re going to see a 60 percent increase in VAT collected. I can almost guarantee that won’t happen.

That is our concern.”

Higher living costs in comparison to Nassau also mean that Family Islands will bear a disproportionate share of the VAT increase’s burden, Mr Rolle argued.

“If the VAT tax is now 12 percent, we can reasonably assume shipping costs may go up by 15 percent,” he said. “The tendency is

that when taxes increase, merchants tend to take the opportunity, unfortunately, to build in a cushion for themselves and it’s the consumer that feels this.

“The impact on the Family Islands is felt even greater. It is our hope that it is not too late. I think they [the government] ought to

SEE PAGE 6

50 years now,” he added.

“If any of this shows positive results in the near term, they’ll be praised. If the VAT has the effect of slowing the economy further, because I don’t see

any growth in the economy, I think there will be hell to pay. It just shows the trap successive governments have left the country in. Neither party gets an escape from that.”

WANTED

Senior ConStruCtion Manager

for Large Scale – Condominium/Hotel Development

A well established and project secured developer is looking for a high-end experienced Construction Manager. The successful candidate must have a minimum of 30 years on-site experience in the high volume, high end residential/hotel construction industry and have a complete portfolio of work performed, including references.

The successful candidate must have complete knowledge of all aspects of highrise construction including but not limit to, budgeting, estimating, critical path scheduling, reporting and liaising with all authorities with jurisdiction and the consultant and ownership group.

They must be in a position to assume full operational control of the entire construction program, must be self-motivated and willing to work long hours, inclusive of evenings and weekends as the schedule would dictate.

Salary will be commensurate with experience. Send Resume and Written References to: jknowles@wynnbahamas.com

PAGE 6, Wednesday, June 6, 2018

$400m extra VAT ‘more than risky’ FROM PAGE FIVE have further consultation. I think it’s a bad idea.”

Mr Rolle warned that Exuma’s unemployment rate would also likely increase as a result of VAT’s increased prices and living costs, with fewer grocery purchases and restaurant meals the likely result.

“We’re going to have a higher unemployment rate from this one decision,” he said. “I would think the government considered that. I can’t see them having made this decision without considering the multiplier effect. But I’m sceptical of this move, and we’ll just have to wait and see.”

To advertise in The Tribune, contact 502-2394

THE TRIBUNE

Gov’t financial systems 80% below maximum FROM PAGE ONE a long-term vision articulated with medium-term fiscal framework, sector programmes and the budget remain a concern as it is not suited to focus on results achievement.

“Ministries plan their expenditures with some certainty, but cash flow planning is limited. Payroll and personnel systems are not integrated... Accounting and reporting systems, and practice, fall below international standards in terms of presentation and disclosure.

“Currently, the government of The Bahamas has established a concept paper and road-map for implementing accrual accounting in accordance with international Public-Sector Accounting

Standards (IPSAS), which envisions completion by 2023. Implementation is being incorporated within the [$33m] loan operation.”

As for public procurement, the IDB said: “The Bahamas does not have dedicated legislation that governs public procurement. The legal framework emanates from subsidiary legislation, in this case the Financial Administration and Audit Act (FAAA).

This situation challenges a co-ordinated approach, as a set of suitable rules for planning, awarding and monitoring government contracts is missing.

“The Bahamas’ current public procurement legislation and regulation is considered below international standards and practices. There is an absence of consolidated

unifying instruments in public procurement at the statutory level with a clear hierarchical structure, able to promote uniform practices of high standards.

“Consequently, they do not cover a full range of issues needed for the functioning of a modern government public procurement system. Without a designated entity to take overall responsibility for the development and functioning of the system, and no feedback/reporting mechanisms, it is unclear how decisions with respect to rules and practices are made and informed.”

Besides establishing a Public Procurement Unit, the government is also implementing a public sector-wide e-tendering system from BIP Solutions, which the IDB branded as “robust” and in line with

the legislative reforms. This should be completed in 2018.

Mr Turnquest reaffirmed the government’s commitment to modernise its financial and information management systems during the 2018-2019 budget, while blasting the former Christie administration for failing to move the $33m IDBfinanced project forward.

Describing the initiative as “floundering up until last year, and producing meagre tangible results”, Mr Turnquest said: “The objective of this exercise is to enhance the capacity of the Ministry to produce high quality information for evidence-based policymaking, as well as improve the ability to better allocate and track public funds.

“As well, the Ministry is moving to the adoption of new budgeting

and accounting software and standards, and the introduction of accrual accounting and the systems that support it. Also in development is the implementation of a new, modern Chart of Accounts that is fully compatible with international standards.

“As an initial step to avoid the build-up of future arrears, the government is enabling accrual accounting with the planned introduction of International Public Sector Accounting Standards (or IPSAS) for government bookkeeping and reporting that will provide increased visibility into outstanding cash requirements and facilitate cash planning. Here again, we are committed to bringing the Bahamian government up to modern and international standards.”

World Bank: Global economy is healthy but growth will slow WASHINGTON Associated Press THE steadily expanding global economy should remain resilient — at least for a couple of years — the

World Bank says.

The anti-poverty agency predicted on yesterday that global growth will decelerate from a solid 3.1 percent this year to three percent next year and 2.9 percent in 2020.

The world economy is generally healthy but must contend with rising interest rates in wealthier countries and weaker demand for commodities in developing nations. It also faces risks from trade disputes,

N O T I C E

NOTICE

EXXONMOBIL NEW ZEALAND

EXXONMOBIL NEW ZEALAND (OFFSHORE BASINS) LIMITED

(OFFSHORE BASINS) LIMITED ____________________________________

_______________________________________________

N O T I C E IS HEREBY GIVEN as follows:

Creditors having debts or claims against the above-named Company are required to send particulars thereof to the undersigned c/o P.O. Box N-624, Nassau, Bahamas on or before 2nd day of July, A.D., 2018. In default thereof they will be excluded from the benefit of any distribution made by the Liquidator.

(a) EXXONMOBIL NEW ZEALAND (OFFSHORE BASINS) LIMITED is in dissolution under the provisions of the International Business Companies Act 2000. (b) The dissolution of the said Company commenced on the 4th day of June 2018 when its Articles of Dissolution were submitted to and registered by the Registrar General.

financial volatility and geopolitical tensions.

The World Bank predicts that US growth will register 2.7 percent in 2018, aided by tax cuts, before slowing to 2.5 percent next year and two percent in 2020. Likewise, the 19-country eurozone will go from 2.1 percent this year to 1.7 percent next and 1.5 percent in 2020, the World Bank says.

China’s growth is projected at 6.5 percent this year, 6.3 percent in 2019 and 6.2 percent in 2020.

The world’s second-biggest

economy, after the United States, is trying to manage a difficult transition from breakneck growth based on often-wasteful investment to slower, steadier growth built on spending

by Chinese consumers.

The World Bank envisions a slump in global commodities prices. It foresees oil prices surging 32.6 percent this year, then dropping 1.4 percent in 2019. Excluding energy, commodity prices will grow 5.1 percent this year but just 0.2 percent in 2019, it predicts.

Dated the 6th day of June, A.D., 2018.

(c) The Liquidator of the said Company is R.W. Rice, of 22777 Springwoods Village Parkway, Spring, Texas 77389, U.S.A.

R.W. Rice Liquidator 22777 Springwoods Village Parkway Spring, Texas 77389 U.S.A.

Dated the 6th day of June, 2018 HARRY B. SANDS, LOBOSKY MANAGEMENT CO. LTD. Registered Agent for the above-named Company

MARKET REPORT TUESDAY, 5 JUNE 2018

t. 242.323.2330 | f. 242.323.2320 | www.bisxbahamas.com

BISX ALL SHARE INDEX: CLOSE 1,931.20 | CHG -9.46 | %CHG -0.49 | YTD -132.37 | YTD% -6.41 BISX LISTED & TRADED SECURITIES 52WK HI 4.40 19.17 7.50 3.85 1.64 0.19 4.05 8.90 6.60 5.30 10.40 2.71 1.61 8.21 6.10 11.48 7.29 13.67 12.51

52WK LOW 3.50 17.43 7.50 3.32 0.90 0.12 3.10 8.40 6.00 3.15 9.00 2.30 1.40 7.25 6.00 8.78 5.67 3.35 12.01

1050.00 1000.00 1000.00 1000.00

1000.00 1000.00 1000.00 1000.00

PREFERENCE SHARES

1.00 103.00 100.00 106.00 105.00 103.00 100.00 10.00 1.01

1.00 100.00 100.00 100.00 105.00 100.00 100.00 10.00 1.00

SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Emera Incorporated Famguard Fidelity Bank Finco Focol J. S. Johnson

Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Commonwealth Bank Class E Commonwealth Bank Class J Commonwealth Bank Class K Commonwealth Bank Class L Commonwealth Bank Class M Commonwealth Bank Class N Fidelity Bank Class A Focol Class B

CORPORATE DEBT - (percentage pricing) 52WK HI 100.00 100.00

52WK LOW 100.00 100.00

SYMBOL AML APD BPF BWL BOB BBL CAB CIB CHL CBL CBB CWCB DHS EMAB FAM FBB FIN FCL JSJ CAB6 CAB8 CAB9 CAB10 CHLA CBLE CBLJ CBLK CBLL CBLM CBLN FBBA FCLB

SECURITY Fidelity Bank Note 18 (Series E) + Fidelity Bank Note 22 (Series B) +

SYMBOL FBB18 FBB22

Bahamas Note 6.95 (2029) BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y BGS: 2015-10-3Y BGS: 2015-10-5Y BGS: 2015-10-7Y

BAH29 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330 BG0403 BG0405 BG0407

BAHAMAS GOVERNMENT STOCK - (percentage pricing) 115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

104.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

MUTUAL FUNDS 52WK HI 2.15 4.16 2.00 178.69 157.58 1.55 1.70 1.62 1.10 6.99 8.54 6.15 10.52 11.46 10.46

52WK LOW 1.67 3.04 1.68 164.74 116.70 1.48 1.62 1.57 1.04 6.41 7.62 5.66 8.65 10.54 9.57

LAST CLOSE 4.40 17.43 9.09 3.84 1.01 0.18 3.10 8.89 6.12 4.10 10.05 2.58 1.60 7.61 6.10 11.00 6.30 3.46 12.51

CLOSE 4.40 17.43 9.09 3.85 1.01 0.18 3.10 8.89 6.12 4.10 10.05 2.56 1.60 7.60 6.10 11.00 6.30 3.25 12.51

CHANGE 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.02 0.00 -0.01 0.00 0.00 0.00 -0.21 0.00

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.40 100.00 100.00 100.00 10.00 1.00

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.40 100.00 100.00 100.00 10.00 1.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

CLOSE 100.00 100.00

CHANGE 0.00 0.00

108.25 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

-0.24 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

LAST SALE 100.00 100.00 108.49 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund FG Financial Preferred Income Fund FG Financial Growth Fund FG Financial Diversified Fund FG Financial Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund

VOLUME

2,050

3,500

VOLUME

EPS$ 0.361 0.932 -0.306 0.283 -0.973 0.000 -1.465 0.638 0.573 0.171 0.627 0.102 0.330 0.000 1.129 0.679 0.610 0.293 0.543

DIV$ 0.080 1.130 0.000 0.230 0.000 0.000 0.000 0.320 0.220 0.120 0.620 0.060 0.050 0.084 0.320 0.500 0.200 0.120 0.580

P/E 12.2 18.7 N/M 13.6 N/M N/M -2.1 13.9 10.7 24.0 16.0 25.1 4.8 N/M 5.4 16.2 10.3 11.1 23.0

YIELD 1.82% 6.48% 0.00% 5.97% 0.00% 0.00% 0.00% 3.60% 3.59% 2.93% 6.17% 2.34% 3.13% 1.11% 5.25% 4.55% 3.17% 3.69% 4.64%

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.00% 0.00% 0.00% 0.00% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 7.00% 6.50%

INTEREST 6.00% Prime + 1.75% 6.95% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25% 3.50% 3.88% 4.25%

NAV 2.15 4.13 2.00 179.39 153.02 1.55 1.68 1.63 1.09 7.15 8.14 6.41 11.26 11.68 10.24

YTD% 12 MTH% 1.23% 4.12% -0.16% 5.10% 0.74% 2.38% 4.66% 3.89% -0.25% 4.57% 1.04% 4.26% -1.06% 2.15% 0.58% 3.61% -0.48% 4.84% -1.08% 1.77% -5.96% -3.05% 1.90% 4.59% 7.24% 11.96% 2.77% 3.88% 3.94% 4.69%

MATURITY 31-May-2018 19-Oct-2022 20-Nov-2029 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045 15-Oct-2018 15-Oct-2020 15-Oct-2022 NAV Date 30-Apr-2018 30-Apr-2018 26-Apr-2018 31-Mar-2018 31-Mar-2018 31-Mar-2018 31-Mar-2018 31-Mar-2018 31-Mar-2018 30-Apr-2018 30-Apr-2018 30-Apr-2018 30-Apr-2018 30-Apr-2018 30-Apr-2018

MARKET TERMS BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings

YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful

TO TRADE CALL: CFAL 242-502-7010 | ROYALFIDELITY 242-356-7764 | FG CAPITAL MARKETS 242-396-4000 | COLONIAL 242-502-7525 | LENO 242-396-3225

PUBLIC NOTICE

INTENT TO CHANGE NAME BY DEED POLL The Public is hereby advised that I, OLIVIA MUNROE BROWN of New Providence, Bahamas, mother of BLESSINGS DIVINITY OLIVIA CHARLES, a minor, intends to change her name to BLESSINGS DIVINITY OLIVIA BROWN. If there are any objections to this change of name by Deed Poll, you may write such objections to the Chief Passport Officer, P.O. Box N-742, Nassau, Bahamas no later than thirty (30) days after the date of publication of this notice.

NOTICE

NOTICE is hereby given that Antonise sensuren of Murphy Town, Murphy Town, Abaco, The Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 6th day of June, 2018 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.

PUBLIC NOTICE

INTENT TO CHANGE NAME BY DEED POLL The Public is hereby advised that I, PIERDRICA JULMISTE of Midshipment Road, Freeport, Grand Bahama, Bahamas, intend to change my name to PIERDRICA WILLIAMS. If there are any objections to this change of name by Deed Poll, you may write such objections to the Chief Passport Officer, P.O. Box N-742, Nassau, Bahamas no later than thirty (30) days after the date of publication of this notice.

PUBLIC NOTICE

INTENT TO CHANGE NAME BY DEED POLL The Public is hereby advised that I, TANYA G. HIGGS of Matthew Street, Nassau Village, New Providence, Bahamas, mother of JOHNATHAN LAWRENCE HIGGS, a minor, intends to change his name to JOHNATHAN LAWRENCE WALKER. If there are any objections to this change of name by Deed Poll, you may write such objections to the Chief Passport Officer, P.O. Box N-742, Nassau, Bahamas no later than thirty (30) days after the date of publication of this notice.

THE TRIBUNE

Wednesday, June 6, 2018, PAGE 7

Trustees report warns Medicare finances worsening, can’t be ignored WASHINGTON Associated Press MEDICARE will run out of money sooner than expected, and Social Security’s financial problems can’t be ignored either, the government said on yesterday in a sobering checkup on programs vital to the middle class.

The report from programme trustees says Medicare will become insolvent in 2026 — three years earlier than previously forecast. Its giant trust fund for inpatient care won’t be able to fully cover projected medical bills starting at that point.

The report says Social Security will become insolvent in 2034 — no change from the projection last year.

The warning serves as a reminder of major issues left to languish while Washington plunges deeper into partisan strife. Because of the deterioration in Medicare’s finances, officials said the Trump administration will be required by law to send Congress a plan next year to address the problems, after the president’s budget is submitted.

Treasury Secretary Steven Mnuchin said in a statement that there’s time to fix the problems. “The programs remain secure,” Mnuchin said. Medicare “is on track to meet its obligations to beneficiaries well into the next decade”.

“However, certain longterm issues persist,” the statement added. “Lackluster economic growth in previous years, coupled with an aging population, has contributed to the projected shortages for both Social Security and Medicare.”

Social Security recipients are likely to see a cost of living increase of about 2.4

THE SOCIAL Security Administration’s main campus is seen in Woodlawn, Md. Medicare’s financial problems have gotten worse, and Social Security’s can’t be ignored forever. The government’s annual assessment is a sobering checkup on programmes vital to the middle class. The report from programme trustees says Medicare will become insolvent in 2026, three years earlier than previously forecast. The report says Social Security will become insolvent in 2034, no change from the projection last year. percent next year, said government number-crunchers who produced the report.

That works out to about $31 a month.

At the same time, the monthly Medicare “Part B” premium for outpatient care paid by most beneficiaries is projected to rise by about $1.50, to $135.50.

Both the cost-of-living increase and the Medicare outpatient premium are not officially determined until later in the year, and the initial projections can change.

More than 62 million retirees, disabled workers, spouses and surviving children receive Social Security benefits. The average monthly payment is

$1,294 for all beneficiaries.

Medicare provides health insurance for about 60 million people, most of whom are age 65 or older.

Together the two programs have been credited with dramatically reducing poverty among older people and extending life expectancy for Americans.

Financed with payroll taxes collected from workers and employers, Social Security and Medicare account for about 40 percent of government spending, excluding interest on the federal debt.

But demands on both programmes are increasing as America ages.

Unless lawmakers act, both programmes face the

prospect of being unable to cover the full cost of promised benefits. With Social Security that could mean sharply reduced payments for retirees, many of whom are already on tight budgets. The report said the total annual cost of Social Security is projected to exceed total annual income in 2018 for the first time since the Reagan era, meaning the program will have to tap into reserves.

For Medicare, insolvency would mean that hospitals, nursing homes and other providers of medical care would be paid only part of their agreed-upon fees.

Medicare is widely seen as a more difficult

problem that goes beyond the growing number of baby boomers retiring. It’s also the unpredictability of health care costs, which can be jolted by high-priced breakthrough cures, and which regularly outpace the overall rate of economic growth.

The Cabinet secretaries for Treasury, Health and Human Services, and Labour usually participate in the annual release of the report, along with the Social Security commissioner, and take questions from reporters. None of those top officials was present on yesterday; an aide cited scheduling conflicts.

The four top officials serve as the Social Security and Medicare trustees, along with two independent trustees who are supposed to represent the public.

The public trustees are usually more candid, but those posts remain unfilled.

President Donald Trump campaigned on a promise not to cut Social Security or Medicare, but he hasn’t offered a blueprint for either programme.

Democrats, meanwhile, want to extend the social safety net by spending more on health care and education. Advocates for the elderly said yesterday there should be no cuts to Social Security benefits.

But federal deficits keep rising, and the recent Republican tax-cut bill is expected to add to the debt.

Last year’s tax law, which cut taxes on Social Security benefits, helped exacerbate the shortfall. So too did repeal of the individual mandate in so-called Obamacare, which promises to increase the number of people without health insurance and therefore Medicare payments for uncompensated medical care.

Higher deficits mean less maneuvering room for policymakers when the day of reckoning finally arrives for Social Security and Medicare.

In principle, the US is supposed to be paying forward its Social Security and Medicare obligations by building up trust funds to cover future costs. That money is invested in special government securities, which also collect interest. But when the money is actually needed to pay for benefits, economists say a government deep in debt could be hard pressed to make good.

PAGE 8, Wednesday, June 6, 2018

THE TRIBUNE

GOP senators push for bill to rein in Trump on tariffs WASHINGTON Associated Press KEY SENATE Republicans are pushing longshot legislation that would require Congress to sign off on President Donald Trump’s import tariffs, a rare attempt to stand up to the administration on a bedrock issue that once defined the GOP. Congressional Republicans are mostly at odds with what they view as Trump’s protectionist instincts on trade. Despite much handwringing, prospects for any bill to challenge him remain uncertain. Many Republicans are hesitant to confront Trump in a legislative showdown that could end badly for them. Doing so could court a veto and bruise their standing with Trump voters they need in midterm elections.

Senate majority leader Mitch McConnell, R-Ky, indicated he was not interested in spending too much time on the effort presented behind closed doors yesterday by its chief proponent, Sen Bob Corker, R-Tenn, saying he preferred to focus on “getting bills passed”. And the secondranking Republican, Sen John Cornyn of Texas, said he hoped Republicans concerned about the tariffs could prevail on the president to reverse course. He was heading to the White House later yesterday for talks.

“Not everything we do has to be legislative. Part of this job is persuasion,” said Cornyn. He said lawmakers would “continue to make the case” with the president and his staff, which he noted is divided.

Trump took office

SENATE majority leader Mitch McConnell, R-Ky, tells reporters yesterday on Capitol Hill he intends to cancel the traditional August recess and keep the Senate in session to deal with backlogged tasks.

Photo: J Scott Applewhite/AP promising to rip up trade deals and crack down on unfair trading practices.

But that campaign slogan is at odds with Republicans’ longstanding preference for free markets and open trade.

The standoff is raising an uncomfortable question: If Republicans can’t confront Trump on trade, can they challenge him on anything?

“For Republicans, this is who we are,” said Sen Jeff Flake, R-Ariz. “If we believe our own rhetoric — on trade, tariffs and congressional prerogative — I hope it does come to a vote.”

The idea being pursued by Corker, Sen Pat Toomey, R-Pa, and others who have been meeting privately — and with Democrats — would be narrowly crafted legislation requiring

congressional approval of the tariffs Trump has imposed in the name of national security.

They’re targeting Trump’s reliance on the so-called 232 authority, named from Section 232 of the Trade Expansion Act of 1962, which allowed the administration to impose tariffs of 25 percent on imported steel and ten percent on imported aluminum from Mexico, Canada and the European Union, some of the US’ top allies. The senators are also hoping to halt Trump’s threat to slap tariffs on auto imports, including those from Japan.

Corker says there’s “no way” automobiles and the other imports are a national security threat. It’s not just Trump, the senators say,

but past administrations that have leaned too heavily into the national security provision they now want to subject to congressional oversight.

“When you can just name anything as a national security issue then basically you undermine the whole trade agreement process,” Corker said yesterday.

Corker’s trying to hitch the legislation to a big annual defense bill making its way through the Senate that includes must-pass pay raises for the troops and other provisions.

Senate Republicans have warned administration officials that the tariffs could dampen the economic gains from the GOP tax cuts.

Senate minority leader Chuck Schumer, D-NY,

said he spoke to Corker about the legislation yesterday. “I believe there is some Democratic support for it,” Schumer said.

But Corker acknowledged the difficulty in passing legislation despite “tremendous concern” among lawmakers in both parties. “My guess is the administration may have some resistance,” he said.

Time and again, Republicans in Congress have been reluctant to put guardrails around Trump as the administration has veered from GOP orthodoxy in policy or as the president interprets the law, as he did earlier this week, to assert the special counsel probe is unconstitutional and that he has the power to pardon himself.

Flake is one of the few Republicans who repeatedly take on Trump, and he has separately offered a bill that would reverse the steel and aluminum tariffs, with support from Democratic Sen Heidi Heitkamp of North Dakota.

Farm-state senators are particularly concerned about retaliatory tariffs that would close off foreign markets to pork and key crops like soybeans and corn. “It isn’t as if the dog has not barked,” said Sen Pat Roberts, R-Kan, the chairman of the Senate Agriculture Committee.

But it’s unclear what lawmakers are willing to do besides bark. Challenging Trump comes with its own risks, from alienating his supporters to taking voters’ attention off a healthy economy before the midterm elections, which will determine control of the House and Senate.

Asked if Congress will act on trade, Sen Roy Blunt, R-Mo, a member of GOP leadership, answered simply: “No.”

TESLA SHAREHOLDERS REJECT BID TO STRIP MUSK OF CHAIRMAN ROLE SAN FRANCISCO Associated Press TESLA CEO Elon Musk has rebuffed a shareholder attempt to overhaul the electric car maker’s board and strip him of his role as chairman, despite worries about the company’s shaky finances and inability to meet its production goals for its first mass-market sedan.

All three directors seeking to remain on Tesla’s nine-member board were re-elected during the company’s annual meeting held yesterday in Mountain View, California.

Directors Antonio Gracias, James Murdoch and Elon’s brother, Kimbal Musk, won by “a wide margin”, according to Tesla. CtW Investment Group, an activist firm that represents labour union pension funds, had spearheaded a rebellion seeking to oust the trio from the board on the grounds that they didn’t know about the auto industry at a critical time in Tesla’s existence.

The company said a “supermajority” of shareholders also rejected a proposal to force Musk to step down as Tesla’s chairman, a position he has held since 2004 — four years before he also assumed the CEO job.

The precise voting totals will be disclosed within the next few days.

Elon Musk holds a 22 percent stake in Tesla, increasing the degree of difficulty for shareholders trying to challenge his authority. After the results were announced, he sought to reassure shareholders attending the meeting and others watching on a webcast.

After describing the past few months as among the most “hellish” in his life, Musk said he expected Tesla to post a quarterly profit during the July-September period. That’s something the Palo Alto, California, company has rarely pulled off in a 15-year history marked by steady losses.

MOBILE

APP

Take us with you Everywhere you go!