A Barbadian-born British-based business development expert is advising Government that taxation is counter-productive and will not be the fix for an ailing economy.
Speaking against the background of the public outcry against the controversial Municipal Solid Waste Tax, chief executive officer of Summerwood Limited, Phil Walker, said the powers that be should take another look at the increased tax burdens on Barbadians.
“I’m aware of the recent tax rise and the outcry that it has caused. I think politicians might have to sit down and reflect and ask the question, ‘is this an effective way of trying to address the issue that pertains to the local economy?’” Walker told the media on the sideline of the monthly business luncheon of the Barbados Chamber of Commerce and Industry (BCCI) at Hilton Barbados today.
He suggested that Barbadian policymakers should examine the Lather Effect, which shows that when taxation got too high, revenue collected decreased.
“People are talking about this in the US, people are talking about it in Europe. What is the appropriate level of taxation that encourages people to pay tax, that encourages the wealthy to pay their fair share of tax as opposed to putting their money in offshore accounts and devising schemes to avoid taxes in the first place?” Walker said.
He suggested investment in infrastructure, roads and buildings.
“If you look at the 1930s recession in America. How did they get out of that recession? The irony is, they invested. They invested in infrastructure, in roads and in buildings. The debt was of course, government paying government debt. But they put people back to work and they built a lot of infrastructure. Now, I can’t comment on all of Barbados’ roads, but it does strike me there are a few roads that could do with some investment,” he said.
“People then have a job and guess what? They earn money, they pay taxes and taxation revenue goes up. So there are more ways of raising tax revenue, just than putting it on . . . a tax that caused everybody a lot of pain recently.”