Withdraw the Municipal Solid Waste Tax or cause the economic problems in the country to worsen.
Economist Ryan Straughn issued this dire warning to the Freundel Stuart administration today, as Government pushes ahead with the tax that is projected to generate $30 million annually.
“Increasing taxes or introducing new taxes in an already shrinking economy is never a good idea; so I would totally support scrapping the tax, but scrapping the tax must mean that you must take additional measures on the expenditure side that will actually make a significant difference in Government having to rely less on the Central Bank to print money to finance its expenditure,” he told Barbados TODAY.
“At this point in time it has the potential to further diminish economic activity, as well as to drive up the cost of doing business across the board; and that is something that I don’t think that businesses or consumers are in a position to see right now, because I think the economy is getting tougher and it will continue to get tougher under these circumstances.”
Straughn, a past president of the Barbados Economic Society, charged that Government did not educate residents about the tax, leaving many of them ill-prepared to make the first payment on July 28.
“Government failed to communicate very clearly precisely what the rates were, what it applies to and who will actually have to pay,” he said, cautioning that this lack of information could be challenged by some residents.
“If you want people to pay a tax you should make them aware that they should have to pay it, and I mean give them the ability to plan, because a number of people would have thought that because they were below the threshold for land tax, that the [Municipal] Tax would not apply to them either.”
The economist accused Government of making some senseless decisions over the past four years. He also contended that a more systemic approach should be adopted to lower the deficit with “significant rationalization of a number of statutory organizations” being at the top of its agenda.
“I don’t think anybody with any confidence can say that things are on stream, particularly when it comes to this tax, and certainly as far as the expenditure is concerned, I don’t see any reduction in the expenditure levels; and the further we get into this fiscal year without any serious [changes to] the statutory corporations would mean then that we end up with another year of a very high deficit, because in all likelihood the revenue will continue to underperform, and if you’re spending more than you spent last year then you could only get a worse fiscal deficit,” Straughn added.