The local business sector is predicting even more taxes as Government attempts to reduce its fiscal deficit.
The Barbados Chamber of Commerce and Industry (BCCI) is also warning that the “paralyzing recession” that has been squeezing Barbados would linger in the absence of clarity in the Freundel Stuart administration’s policies.
BCCI President Eddie Abed said failure to have meaningful dialogue with the social partnership would “add to the fog and further uncertainty will prevail”, and would result in “delaying the end to this paralyzing recession and a return to growth”.
“I’m only too aware that the Government’s estimates showed increases in both their revenue and deficit for fiscal 2016-2017; and rightfully, I can only assume that there will be an increase in taxes, levies, surcharges, fees and the like, once the budget is passed in Parliament,” Abed said in this month’s BCCI newsletter.
“The uncertainty of changes in policy and how much these additional revenue-raising measures will impact on businesses prevent management from planning with certainty. Without certainty, there is a lack of confidence; and without confidence one is forced to plan for the worst and hope for the best. The end result gives birth to an atmosphere where survival instincts dominate and ultimately lead to stagnation, if not a recession, in our economy,” the Bridgetown businessman warned.
He said the situation was compounded with the recent vote by the United Kingdom to leave the European Union (EU), which triggered a devaluation of the sterling.
The BCCI head predicted that Barbados would “suffer financially” from the current uncertainty, with both tourism and real estate here expected to feel the impact.
“Many real estate purchases in the Caribbean were on hold pending the Brexit vote and when the outcome to exit Europe came, the sad reality was confirmed that these potential purchases would not materialize.
“So coupled with the loss of the foreign direct investment, comes the reality that a Caribbean holiday will now cost the Brits more due to the devaluation of sterling. The short to medium term outlook for our tourist industry is not too rosy, as the UK market has been historically our strongest source for visitors,” Abed reasoned.
The businessman advised that Government should move swiftly to reduce its deficit not only by introducing revenue-raising measures but also by reducing its expenses.
Abed said the Chamber was of the view that citizens who paid direct taxes should enjoy a reduction in taxes.
This, he said, would allow working Barbadians to keep more of their earnings and by extension allow them to spend more to help breathe life back into the economy.
The BCCI head warned that Government’s options to trim the national deficit were limited, adding that the “long awaited critique of government agencies and statutory boards is now imminent”.
“There has traditionally been duplication of state-run entities tasked with similar mandates and quite rightly, they should be merged,” Abed said, adding that there was also need for consistently good, professional and efficient service to help ease the uncertainty by the general public.
Abed was also critical of Government’s budgetary transfers to state-run entities, saying these had been unsustainable for many years.
“Our Members of Parliament have been tasked to ‘bell this cat’, but this obvious need seems to be in direct conflict with our politicians’ desires to be re-elected; as most certainly there will be austerity accompanying the trimming of the fat.
“When tough decisions are to be made, the greater good of the country and all of its citizens must be paramount. Sadly, these decisions are sometimes couched in fear mongering, which does not bring us any closer to a sustainable future for our children – a future which must include means testing, user fees and public private partnerships, appears to be imminent in an era where scarce Government revenue is being called upon to do more,” the BCCI head wrote.