The Opposition Barbados Labour Party (BLP) has reacted swiftly to a suggestion by the business community that Government should consider raising income tax instead of imposing new taxes to combat its fiscal challenges.
BLP leader Mia Mottley issued a brief statement late this evening saying it was unfair to expect already struggling Barbadians to carry the burden for “Government’s incompetence or the greed of a few” by raising income taxes.
“We have listened keenly to the private sector and however well intentioned they may be, there can be no attempt to place income taxes back on the backs of poor people in this country again,” a defiant Mottley said.
“Poor people could barely afford income taxes in good times, how could they in all conscience do it now in these difficult times and ask them to pay for the Government’s incompetence of the greed of a few? [It] is completely unacceptable if we are to maintain a stable cohesive society in this country.
“The truth is, fiscal problems in this country were not caused by poor people and the solutions to our fiscal problems will not come from putting on the backs of poor people additional income taxes,” the Opposition Leader stressed.
In appealing to with Minister of Finance Chris Sinckler not to introduce any new taxes when he presents the Financial Statement and Budgetary Proposals later this month, the business community admitted that the lingering fiscal challenges would warrant some “painful” austerity measures.
However, Chairman of the Barbados Private Sector Association (BPSA) Charles Herbert told Barbados TODAY any course of action should involve adjustments to current levies such as income tax and Value Added Tax, not the imposition of new duties which “always create all kinds of problems”.
“The key thing we are hoping for is that the Government will use the current mechanisms it has in its armory, VAT and income tax, and not introduce a new tax or something that requires more administration,” he said.
“Why put in a new tax? You have existing mechanisms, but don’t put in any new administrative mechanisms because every time you put one in it is difficult.”
Sinckler last August announced a two per cent National Social Responsibility Levy which he anticipated would have raised $142.1 million – $82.9 million for the 2016/2017 financial year when prorated from September, 2016 – to help cover the cost of health care.
However, nine months later, industry officials said they were still uncertain about how it should be applied.
Herbert supported Acting Governor of the Central Bank Cleviston Haynes’ call last week for Government to demonstrate greater fiscal discipline and to address several pertinent challenges, including the fiscal deficit, the international reserves, the country’s debt and a framework for promoting and creating economic activity.
The private sector official stressed that tackling those challenges would come with “some kind of hardship”.
“We have to keep saying to the population, ‘there is going to be pain, there is no way out of it without pain, we just have to make sure that the pain is evenly spread around so that nobody is taking all of the burden.
“The key is that the Budget needs to be balanced all around so that it minimizes the effect on any one group in society,” Herbert stressed.
The BPSA chairman said he was eager to find out if Sinckler would introduce in the May 30 Budget, any of the recommendations from the two working groups of the Social Partnership established two months ago by Prime Minister Freundel Stuart to advise on ways to lower the fiscal deficit and increase foreign reserves.
Stuart has already dismissed the proposal to sell the National Petroleum Company and the Barbados National Oil Company Limited, while Sinckler has all but ruled out the recommendation to increase airport and cruise taxes.
Other recommendations included examination of the national import bill “with a view to identifying a list of non-essential items which would be subjected to higher tax rates and or quantifiable limits” and lowering of the VAT rate to below 15 per cent, with no exemptions, concessions or zero ratings for any sector.
Meantime, the 40,000-member Barbados Association of Retired Persons (BARP) is also concerned about the possible impact of any belt-tightening measures on senior citizens.
BARP President Ed Bushell told Barbados TODAY while pensioners recognized Government’s fiscal dilemma, they remained one of the most vulnerable groups, and the imposition of new taxes would hurt them.
“We recognize the predicament that the Government currently finds itself in, but one thing that we know would not be helpful at all would be any significant increase in taxation, especially on senior citizens who are the most vulnerable,” Bushell said.
“That is a matter we are very concerned about, and we wait to see what direction the Budget takes. We are hoping that there are no new taxes – any imposition or commission on us,” he added.
Last year seniors benefited from a $10 per week or $40 a month rise in old age non-contributory pensions.