He has been very critical in the past of statements made by Parliamentary Secretary in the Ministry of Finance Senator Jepter Ince.
But after hearing the lavish manifesto promises of 100 per cent debt relief and significant tax repeal made last weekend by the Grenville Phillips-led Solutions Barbados, former Prime Minister Owen Arthur said tongue in cheek yesterday he has had to reverse his opinion of Ince.
The revolutionary economic plan includes an across-the-board ten per cent flat tax and would replace the Value Added Tax (VAT), as well as the National Social Responsibility Levy (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, Solutions Barbados 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.
And while acknowledging that over $1 billion was currently owed to Government in terms of tax and other arrears, the party is contending that there is more to be gained in terms of economic stimulus from forgiving those debts than keeping them on the books.
“When I read it, I thought it was a very clever attempt by Mr Grenville Phillips to make Jepter Ince appear to be a genius,” Arthur told Barbados TODAY before totally rejecting the proposals as “perfect folly”.
“Look, there are some things that you comment upon because they are in the realm of reality and there are some things that are of such perfect folly that you don’t,” he said, adding that he had learnt the hard way not to respond to Grenville Phillips.
He explained that on one occasion when he was prime minister, Phillips was invited by the private sector to a national consultation to make a financial presentation on the international business sector.
‘Mr Phillips’ consultation to that exercise was singular. He said as far as he was concerned no public servant in Barbados should be paid because they don’t do any work . . . and as chairman of the Social Partners and Prime Minister of Barbados, I felt a need to defend the public servants from what I thought was just a ridiculous, nonsensical attack by a pure idiot . . . [but on this occasion] I am not going to attack Mr Phillips because I regard him as a genius,” a chuckling Arthur said.
However, in the same breath the former prime minister and respected economist said he supported the position taken by the Lynette Eastmond-led United Progressive Party in its mini-manifesto that Barbados needed to pursue a borrowing arrangement with the International Monetary Fund (IMF).
“The fact of the matter is that the problems facing this country at the economic level are so vast that we are not going to get over them without significant help from the international financial community. And that is not to profess any love for the IMF, it is just to reflect a reality and I suspect without being able to prove it that the Government has been talking to the fund. My great fear now is that what the Fund would have been able to recommend three years ago they will not be able to recommend now.
“So that the adjustment would have been less painful and you would have access to the foreign exchange receipts to help you make the transition,” said the former prime minister, who has been pleading with Government for several months now to take urgent corrective action to stop the country’s economic hemorrhaging, but to no avail.
With the country’s international reserves said to have fallen below $500 million and Government now having exhausted most of its policy options, Arthur again warned that swift and definitive action was needed to stop the economy from plunging.
“You may get some reserves coming in from the sale of the [national oil] terminal, but that is a one off. That would stop the hemorrhage but that is not a process of foreign exchange earnings that you can sustain. So the fundamental problems will still be there,” he said, while cautioning that “what was driving the economy was no longer driving it and the fundamental challenge now is to fix the economy.
“The tourism sector can lead but the tourism sector cannot carry it alone and Barbados needs to have a series of sectors of the strength of the former international business sector to supplement tourism and the resources have to be devoted to make that happen.”
Arthur also said “some of the entitlements we have gotten accustomed to, we can no longer carry”.