Barbadians will no doubt welcome some of the specific measures announced by Prime Minister Mia Mottley in today’s mini-Budget. In particular, the planned repeal of the dreaded National Social Responsibility Levy and the abolition of road tax, both of which take effect from July 1, as well as the proposed repeal of tuition payments at the University of the West Indies come September, and promised pay increases for public servants and pensioners during the coming income year.
With that said Ms Mottley’s Budget contained more than enough bitter medicine in it to make the average householder and business owner grimace in anxiety – from a new fuel tax, which will be levied at a rate of 40 cents per litre of petrol and diesel and five cents per litre on kerosene effective July 1, to a new combined 2.5 per cent Health Service Contribution to be paid by employers and employees.
The Budget also makes provision for a new Garbage and Sewage Contribution – another way of saying tax – to be levied on households through Barbados Water Authority bills at a rate of $1.50 per day, effective August 1.
As part of a broad brush, Barbadians carrying out online transactions will also now be subject to Value Added Tax, effective October 1, 2018 and for those middle class families in particular with travel plans this year, they will also have to make provision for an airline travel and tourism development tax that will be charged at a rate of US$70 per passenger flying outside of CARICOM and US$35 per passenger flying within CARICOM effective October.
In a further blow to tourism, Government has introduced a new Room Levy on all domestic hotel rooms, effective July 1, as well as a 2.5 per cent Product Development Levy on direct tourism services and a ten per cent tax on all shared economy, such as Airbnb and Homeaway.
To say that this is not a bitter Budget is not to fully grasp the impact of these far reaching measures on the average Barbadian household, some of whose members may be smiling now over the short-term gains in terms of the announced repeals, but crying later when the other measures really start to kick in.
To be fair to Ms Mottley, she did make it clear from the outset today that though a change of Government was needed, that, in and of itself, would not be enough to bring our country back from the precipice.
“Irrespective of the outcome of the elections, Mr Speaker, it was clear to the Barbadian electorate that urgent action would be needed the very morning after.
“Their vote was not therefore about determining whether hard decisions had to be made; it was about determining, in their own wisdom, who was best qualified, most able and most trusted to make those decisions in their name. That question was answered by the emphatic expression of the will of the people [on May 24],” she said, adding that “my Government is humbled by their overwhelming vote of confidence, and acutely conscious of the solemn obligation it has placed upon us to bring Barbados back from the brink.
“I pledged then, as I do now, that the first task of a new Barbados Labour Party administration would be to halt the decline and decay of the last ten years, restore confidence and hope, and set clear guidelines and timelines for finding and applying solutions to our most critical challenges.
“I gave my word that a Barbados Labour Party Government under my leadership would respond courageously to the social and economic crises now facing the country, and that we would make the tough choices between what is essential, what is highly desirable and what is optional. And I said that at all relevant stages of the process we would keep the Parliament and the people of Barbados fully informed,” Ms Mottley said before announcing the drastic measures, which also include a five per cent increase in corporation taxes to 30 per cent, as well as the introduction of a new tax band at the highest end of the income scale.
At the end of the day, as the Prime Minister said, “we cannot promise to serve omelette down the road, if we refuse at this time, to crack the eggs”.
We can only hope that with her $1.2 billion adjustment plan all will still be able to afford eggs at the end of the day.