By KEVA LIGHTBOURNE, Guardian Senior Reporter, kdl@nasguard.com

As debate on the 2008/09 Budget got underway in the House of Assembly yesterday, the Official Opposition continued its attack on the government's new fiscal plan, with St. Thomas More MP, Frank Smith labeling it a "disaster of a budget".

Smith, who was the first Progressive Liberal Party member to contribute to the budget debate, accused the government of covertly introducing new taxes.

His claim came just hours after Prime Minister and Minister of Finance Hubert Ingraham explained in detail the removal of stamp taxes on 160 food items, a two-year tax relief on the Bahamas Electricity Corporation's fuel imports, a reduction in custom duties, and the elimination of stamp tax on mortgage transfers.

But, Smith said an appropriate theme for the budget exercise could well be "fool them again, man; fool them again", as he claimed it contains new taxes the government did not disclose. He pointed to the new excise tax, which is projected to account for $234 million in revenue over the next fiscal year. In addition, customs duties are expected to account for $75 million less than last year. Despite that, he said the projected revenue earned by both customs duties and excise tax receipts combined is $750 million, a 26 percent increase in the revenue earned from customs duties and stamp taxes in the 2007/08 Budget.

Smith said the increase in tax revenue is more than the value of certain tax concessions granted in the budget.

"The total projected increase in what we know as customs duties, $146,500,000, is more than what he says is the value of all of the concessions being granted from stamp taxes to the homeowners, under the Downtown Re-development Act, and the Family Island Development Act all combined, since all of these concessions in total represent tax relief of $131,301,5000. What is particularly amazing about this is that the prime minister would have us believe that this 26 percent increase in customs duties will take place at a time when the economy is growing at a rate of two per cent in real terms," Smith said.

But, he insisted that just does not add up.

"What seems clear from this budget is that under the guise of modernizing the tax laws the effective rate of duties overall will increase," said the PLP member of Parliament. There will be an increase in taxes and this will explain why the prime minister was not able to say the three magic words 'no new taxes'."

Smith explained that a preliminary review of the Tariff Act would suggest that automobile import is certainly one area that, in effect, the tax rate has definitely increased. By eliminating the concessionary rate for the import of cars to a relatively lower value the government will overall earn more from the import of this single product.

"The government would have us believe that it is introducing a major initiative for providing relief against the increasing cost of fuel, as a result of changing how much tax BEC would have to pay for the next two years. What the prime minister has not said is that the higher the cost of fuel goes, the more revenue the government gets, because the import tax on fuel is calculated on a percentage of the overseas costs and not as a flat sum per gallon," Smith said.

Prime Minister Ingraham announced during the 2008/2009 Budget communication last week that the government has granted BEC a two-year suspension of the 10 percent customs duty and seven percent stamp duty, as a measure to address the rising cost of the utility surcharge, which currently includes the seven percent stamp tax.

State Minister for Public Utilities, Phenton Neymour, told The Nassau Guardian that as a result of the cuts, consumers should see a reduction in their light bills, possibly as early as July.