A former Cabinet minister in the previous Democratic Labour Party (DLP) Government is warning that Barbadians will be worse off as a result of today’s Budget presentation by Prime Minister and Minister of Finance Mia Mottley.
In a written response emailed to Barbados TODAY this evening, former Minister of Culture, Sports and Youth Stephen Lashley took particular issue with Mottley’s decision to repeal the road tax and to replace it with a fuel tax.
In fact, he described it as “the most negative” of all the policies announced by Mottley.
While cautioning of both direct and unintended consequences, Lashley suggested that the fuel tax, which is expected to rake in $80 million compared to $65 million in road taxes, would negatively impact transportation costs.
Lashley, whose previous DLP Government has been blamed for the precarious economic situation in which the country now finds itself, also predicted an increase in bus fares as a result of the measure that will affect the operations of both public and private public service vehicle operators.
Effective July 1, the fuel tax is to be levied at a rate of 40 cents per litre of petrol, 40 cents per litre of diesel and five cents per litre of kerosene.
“This will create further burdens on the travelling public, especially lower income workers,” Lashley further cautioned, adding that a shop assistant who is currently being paid $70 per week and has to take two buses to get to work would be greatly challenged to survive.
Calling it a “brainless tax” which had no regard for the poor, Lashley further warned that the fuel tax would result in a hike in the overall cost of living.
“For example, for every item of food and beverage imported into Barbados, additional cost will now have to be added as those items move from the ship, to the bond and ultimately to the supermarket shelves. The impact will escalate as each application of the tax will have to be added to the cost of the item to the public [and] the cost of living will drastically increase,” he said.
“In addition, one can expect that cost will have to be added at the various stages of storage of the fuel in order to recover the cost of transporting those fuels which itself will add to the cost,” Lashley added.
Lashley, whose DLP was severely criticized for its economic management of the country and failed to retain a single seat in the May 24 general elections, also warned that the main issue of Government expenditure which was highlighted by the International Monetary Fund in its report last week, was not addressed in the Budget, adding that this was not likely to go down well with the IMF given upcoming negotiations for a balance of payments support programme.
He also suggested that instead of adequately addressing the issue of taxation, all that the Budget had done was to replace the dreaded National Social Responsibility Levy with other tax measures without addressing Government’s high spending.
“So what we had was simply an exercise in shifting and adjusting but not addressing the critical issue of expenditure. So does this Budget clearly outline a pathway towards improvement in the public finances? I would say, ‘no,’” Lashley told Barbados TODAY.
He also pointed to a promised five per cent increase in the public sector wage bill, adding that “when one considers that even more adjustment would be necessary to pay for a hugely increased Cabinet, the public sector wage bill and the wages bill of statutory corporations would be going up rather than coming down.
“All of this will negatively impact on growth,” Lashley cautioned, while casting doubt on Government’s hopes of realizing a surplus in the near future.
With respect to impositions on the tourism sector, he said they would reduce the island’s overall competitiveness and act as a deterrent, particularly to those young people at the Barbados Community College who were looking to find employment in the sector.
He questioned the wisdom of placing such taxes on Barbados key earner of foreign exchange, especially at a time when the country needed to see growth in those sectors that earned foreign exchange.
Lashley said the tourism measures would undermine the regional integration effort, particularly in view of the calls by the Barbados-based Caribbean Tourism Organization for regional governments to work together to reduce the tax take from tourism to achieve increased intra-regional travel.
He said the tax on Airbnb accommodation would also deter Barbadian homeowners from getting involved in this new area of entrepreneurship for which they should be encouraged rather than punished.
Lashley also threw cold water on the just-announced health levy, asking why then do we have the existing NIS contributions. In fact, he said the announcement amounted to a double imposition on employers and employees.
On the plan to forgive taxes for a specific period of 1968 to 2000, the former minister called for full public disclosure of the beneficiaries of this tax write off. He said this was particularly critical in view of the Government’s promised integrity legislation and to rule out any suspicion that this could be seen as a reward for those who may have financed the BLP’s campaign.
On the issue of payment to sugar farmers for growing sugar cane, he said it would be a legitimate question for taxpayers to ask why they were being made to pay sugar producers to grow canes and to prepare the fields for agriculture.