Economist Michael Howard has poured cold water on the manifesto launched last night by the Barbados Labour Party (BLP) as nothing more than a “pie in the sky thing”.
Howard, a retired professor of economics at the Cave Hill campus of the University of the West Indies (UWI), said the BLP failed to address several critical issues in the document, including the country’s foreign reserves, which stood at 6.9 weeks of import cover as at the end of March.
“I don’t think there has been any solutions put forward to solve the reserves, to say how we are going to increase the level of our reserves and bring them back into equilibrium,” Howard told Barbados TODAY.
“The reserves, that is the first problem. I think that is the most important problem the BLP manifesto has not addressed,” he stressed.
The BLP last night promised that should it win the May 24 general election it would abolish the onerous National Social Responsibility Levy, reduce the Value Added Tax (VAT) from 17.5 per cent back to 15 per cent, replace the road tax with “a small tax on fuel”, increase non-contributory pension from $155 to $225 per week, and remove tuition fees for Barbadians attending UWI.
In the 70-page document dubbed, The People’s Manifesto, the Mia Mottley-led party promised to properly manage Barbados’ resources, “end wastage and cut out corruption”, which it said would result in more cash in hand to address priority issues.
“We will re-profile our existing debt to free up substantial cash flow over the short term. We will further simplify the tax system, tighten loopholes, and enhance compliance,” it said.
“The BLP will remove the taxes that are strangling the economy, build investor confidence and encourage private sector investment. These policies will grow our economy, and by extension, our revenues,” the document said, adding that “every year, the Government spends more than $500 million making interest payments”.
However, Howard recommended that the BLP returns to the drawing board to come up with answers to issues such as the size of the public service – which continues to account for a large portion of Government’s expenditure in the form of wages and salaries and transfers and subsidies.
“I always ask the question, how are we going to continue to pay the public servants and at the same time reduce taxation? What I find in the BLP’s manifesto is that they are saying they [are going] to reduce taxation – road tax and VAT and take off the NSRL, but they are not saying where the money is going to come from to pay the public servants,” he insisted.
The BLP also told the large gathering at Kingsland, Christ Church last night, it would bank on investment and increased spend to help grow the economy, a pledge Howard described as an illusion.
“You need to say that we are going to have a certain amount of money from taxation because if you reduce taxation, tell me how much is going to be left to help finance the public sector wage bill. If you tell me you are going to get money from there [investments] that is not really definite. You can’t make your plans on what is possible sometime in the future, you have to make your plan on something that is definite,” he said.
In relation to the BLP’s plan to increase non-contributory pension, the economist said this was not well thought out since this could have a devastating impact on the National Insurance Scheme (NIS).
“It means you have to look for something like $900 a month to pay people their non-contributory pension and it also means that you have to increase the contributory pension because the non-contributory are indexed to the contributory . . . We are talking about putting the NIS under severe pressure. So I think these things are not well thought out,” Howard concluded.