Ms Husbands “is calling for a national campaign to educate Barbadians about the importance of taxation, how it is determined and how it contributes to economic development,” (Midweek Nation Nov 13).
Is this Government’s reply to the Barbados TODAY (BT) Editorial of Nov 11, All Hands on Deck?, which highlighted the 20 per cent increase in profit made by the Trinidadian holding company of Republic Bank as a result of the Mottley administration’s corporation tax cut, while pointing out all the other ways the money saved by this foreign corporation – which will now leave Barbados in foreign exchange – could have been used to benefit Bajans?
Opportunity Costing is a useful management accounting technique. Before spending limited funds, consider what things you are giving up by using the money in this way. This is the opportunity cost of your decision.
BT’s excellent editorial pointed out the opportunity cost (loss) to Barbados of just this one foreign business’ corporation tax cut. Imagine all the other opportunity costs (losses) resulting from the almost $600 million windfall to businesses.
It seems Ms Husband is planning a propaganda campaign to convince Barbadians that their right-wing ideology of so called “Trickle Down” (actually trickle up to the top and out in foreign exchange as with Republic Bank) Taxation strategies with big giveaways for large corporations and high earners – which have to be paid for by ordinary working Bajans paying higher taxes – is actually for our benefit.
Or is she trying to soften us up for another round of tax increases, saying “citizens could not demand more services without being willing to pay more taxes”?
In late 2017, I wrote “Murdonomics is killing us” describing the right-wing economic ideology and how the Murdoch media empire has promoted this mythology, first implemented by Mrs Thatcher in Britain and then by Reagan, now surpassed by Trump in the US.
These pretend policies do not produce growth, but simply increase income and wealth inequality which, over time, leads to violence and eventually to civil strife. The Barbados Family Planning Association which has no political axe to grind has attributed today’s violence among the youth to increasing financial stresses in their households since 2008.
My father was four years old when a mob surrounded their family home and threatened the safety of his mother and brothers in 1937. He believed very strongly that income inequality was the cause of the riots and was a firm supporter of policies that built and sustained the growth of a working middle-class which developed economic and political power through the 50s, 60s and 70s.
He fiercely opposed policies, on both the far left and far right, which would destroy the economic gains of working people and bring back the inequality which caused not only the 1937 riots in Barbados and civil strife throughout the Caribbean, but led to Marxist uprisings beginning in Russia in 1917, later spreading throughout Europe, the Spanish civil war raging also in 1937 with the hyper polarized Marxists versus Fascists clashes ending ultimately in the Second World War in 1939.
He frequently impressed on us his support for civil rights, the belief that everyone is entitled to equal opportunity and the danger of destroying the middle rungs of the economic ladder, creating a gulf between the rich owners of capital at the top and a large group of struggling workers competing for low-paying jobs, driving down the living standards of the majority as happened in the first Industrial Revolution. He believed that the peaceful, quiet nature of Bajan life depended on maintaining that ladder with a solid, strong middle-class.
The almost complete reversal and cancellation in Europe and the US since 1980 of those progressive taxation policies which underpinned the economic growth and development of a working middle-class has caused an increase in income and wealth inequality leading to the success of populist political campaigns worldwide which threaten to destroy Western democracy and made even the rich world of Davos earlier this year question whether unbridled capitalism is destroying itself.
Barbados has, since the first IMF agreement in 1992, increasingly followed these right-wing capitalist policies, with the implementation of VAT in 1997 beginning the shift of the burden of taxation downwards onto ordinary workers, allowing the Arthur administration to cut taxes for those in the top income brackets, reducing Corporation Tax in 2004 from 40 per cent on Profits (not Income as with working people) to merely 25 per cent by 2007 – just months before the international financial crash which crippled our economy.
If Ms Husbands believes in “the importance of Taxation … and how it contributes to economic development” perhaps she should begin her campaign at the corporate level by asking why profitable businesses should not contribute in a fair and equitable manner to the services and infrastructure which they and their workers utilize in generating these huge profits and why her Government believes that the workers, who are also the main consumers, should contribute the bulk of revenue to providing those services through service fees, consumption taxes and Income Tax rates which when National Insurance contributions are added, are almost the same for those at the top as for those working for barely enough to survive – 11.1 per cent up to about $2,083/month income, 23.6 per cent to $4,820 (self-employed pay 29.6 per cent), 12.5 per cent from $4,820-$6,250 and just 28.5 per cent from Jan 2020 on everything over $6,250 with the biggest businesses paying a mere 1 – 5 per cent on profits.
I was so concerned before the election by these trends in taxation policy which I had observed between 1997 and 2007, which was continued by the Sinckler administration which eliminated allowances and raised consumption taxes on workers’ income, but never touched the recently reduced corporation rates, that I attended a meet & greet at a former friend’s house and challenged Miss Mottley on this issue.
She made what I now realise were politically soothing noises without saying anything substantive. Then, as soon as the BLP were in power, doubled down on their right-wing corporatist agenda by removing almost completely taxation on Corporate Profits and reducing drastically the Income Tax rates on persons earning above $6,000/month, with the greatest giveaways going to those earning eight, ten, 12, 15 or more thousand dollars each month, implementing new taxes on water and fuel, raising bus fares and duties on some goods as well as new methods of collecting taxes in order to pay for the giveaways.
The real purpose of the Water Tax, which Bajans thought was to improve the sanitation service and sewerage system, was to remove the cost of the Sanitation department from the consolidated fund and fully fund the service by a separate new tax. By removing this charge from the consolidated fund they freed up those funds to compensate for their giveaways. The retrenchment of staff also cut down on expenses to facilitate the tax cuts – a staple of IMF thinking in which Minister Straughn would have been indoctrinated during his study at the IMF Training Institute – that reducing Government salary and wages costs and handing that money instead to high income earners will enable them to invest in businesses so it will “trickle down” and create more jobs and growth in the economy. All it really does is create greater wealth for the rich and more suffering for those who lose their livelihood when their jobs are gone.
Higher taxes for working people; job losses for Government workers, many over 55, who will never find work again; small businesses closing because their customers have no money to spend, replaced by large foreign corporations; seniors without pensions, without the interest on their savings; hard-working people without a raise; high bus fares; taxes on essential services such as water; no money to spend on important services like the hospital, garbage collection; staff shortages at Government departments resulting in problems, delays and confusion such as witnessed with TAMIS and AYESCUDA; low morale and fear of dismissal among Department staff; a disillusioned and hopeless population wondering where to turn for help.
These are the opportunity costs (losses) of the big tax cuts and concessions at the top which benefit the biggest corporations and richest, high earning professionals and executives and the only place it will “trickle down” is in Trinidad for most of the Corporation Tax savings to the big holding companies and in Miami and New York for the spending by the rich who can afford to travel frequently and do their buying overseas – all in foreign exchange. Trickle up and out while Bajans suffer.
And Ms Husbands will try to educate us about “the importance of Taxation… and how it contributes to economic development” in Trinidad, Miami, New York and Canada.