With elections around the corner, a new “economic solution” has been put on the table that, if deemed feasible by the electorate, will not only lead to a repeal of the dreaded National Social Responsibility Levy (NSRL) and the like, but also 100 per cent debt forgiveness on the part of Government.
The revolutionary plan was unveiled at the weekend by none other than the political party that goes by the name ‘Solutions Barbados’.
During a public launch event on Saturday, the party’s economic spokesman Scott Weatherhead bitterly complained that Barbadians were at the point of “tax saturation”, before revealing the Solutions Barbados plan which he described as “the complete opposite of all that has been done” by the “two obsolete parties” – the incumbent Democratic Labour Party and the main Opposition Barbados Labour Party.
“Our economic solution does not include going to the IMF [International Monetary Fund] to borrow any more money. It does not include more taxes. It does not include more austerity. . . [but] we are proposing to put money back in your pockets by reducing taxes across the board, so as to reduce the cost of living in Barbados, so the citizens of this country can live and eat once again,” Weatherhead said.
The party’s economic plan includes a “ten per cent flat tax” which is to be implemented across the board, and would replace the Value Added Tax (VAT), as well as the NSRL, the two per cent foreign exchange commission and other measures which were recently announced by Minister of Finance Chris Sinckler in his May 30 Budget.
As part of its ambitious economic strategy, the party is also promising to remove the 25 per cent corporation tax on profits; the 35 per cent personal income tax; and the excise tax on fuel, and to either reduce or remove import duties on a range of items.
While acknowledging that over $1 billion was currently owed to Government in terms of tax and other arrears, Weatherhead argued that there was more to be gained in terms of economic stimulus from forgiving those debts than keeping them on the books.
“So if you owe the Government of Barbados money in land tax, solid waste tax, road tax, VAT, corporation tax, personal income tax, or any money whatsoever, we will write off your debt completely, and you will no longer owe the Government of Barbados a red cent on the day we are elected to office in this country.
“That is a guarantee. So everybody will have a clean slate to start off this new tax system with. But we will expect everybody to be tax compliant from then on,” he explained.
Solutions Barbados is also proposing to remove current taxes levied on the banking sector, and as an incentive to get businesses to bring home any foreign currency they earn, to tax them at five per cent on their foreign exchange.
Additionally, the ten per cent flat tax will not apply to the offshore sector.
However, among its many promises the party said it would no longer tax retirement benefits in Barbados, while it would establish a new National Development Bank; make all state owned enterprises accountable and empower the auditor general to take action against those state owned enterprises and statutory corporations that do not file their financial statements on time.
During his speech Weatherhead, who is the candidate for Christ Church East Central, also assured that his party’s proposals were “not cheap political ploys to get votes”, but “carefully crafted economic measures to boost the foreign reserve, and to stabilize and grow the economy of this country”.
In fact, Weatherhead touted the imposition of the flat tax on gross income as a means of dramatically improving the spending power of Barbadians.
“That means that the old couch that the dog bit up, you can finally send to the dump, and you can buy a new one . . . that the old car that you have been driving around for the last 15 years . . . you can finally get rid of, and buy a new car . . . the house that needed painting for the last ten years, can now get painted . . . the rusted out fridge and washing machine that needed replacing for the last ten years can now get replaced, because you can finally afford to do these things,” he told those gathered in Independence Square, The City for the event.
Weatherhead also suggested that while Barbadians were currently only able to hold on to 70 cents in every dollar, with the Solutions strategy, they would be able to keep 20 cents more of what they earn in their pockets, which he said could only redound to national economic growth.
“This is not a tax system that Solutions Barbados came up with. It is a modern, tried and tested tax system, which has worked extremely successfully in at least 37 countries around the world, including some right here in the Caribbean, and 11 US states,” he said, while describing the current tax system as “antiquated and outdated” and full of loopholes.
A number of countries in Eastern Europe have introduced some form of the flat tax in a bid to boost economic growth.
Estonia was the first European state to do so when, in 1994, it replaced three tax rates on personal income, and another on corporate profits, with one uniform rate of 26 per cent.
It was followed by Latvia, Lithuania, Russia, and later, Slovakia, which imposed a uniform 19 per cent tax rate on personal and corporate income, in addition to a 19 per cent VAT.