BPSA head: Gov’t Should prioritise revenue Collection

The local business community is bracing for possible public sector layoffs and/or increased taxation in the new financial year, as the Mia Mottley administration pursues ambitious fiscal targets imposed by the International Monetary Fund (IMF).

President of the Barbados Private Sector Association (BPSA) Trisha Tannis is, however, calling on the Government to protect the social fabric by ensuring that the working class is shielded from the brunt of expected pending adjustments.

“It is reasonable to expect that there is going to be some degree of hardship,” Tannis told Barbados TODAY.

As recently as December, the IMF declared that the Government should seek to reach a six per cent fiscal surplus by the 2024/2025 financial year, after relaxing its targets to provide the fiscal room to respond to recent natural disasters and the COVID-19 pandemic.

Over the course of the recent election campaign, some quarters suggested that Mottley’s early election call was a sign that social and economic hardship was on the horizon.

Last Friday, Director of the Sir Arthur Lewis Institute for Social and Economic Studies (SALISES) at the UWI, Professor Don Marshall called for a renegotiation of the ambitious targets, which he warned would leave the country economically “hamstrung”.

In an interview with Barbados TODAY, Tannis endorsed Marshall’s suggestion, explaining that after running a modest one per cent fiscal deficit the Government’s new targets would likely require significant revenue growth through taxation or reduced expenditure through job cuts.

“I do endorse the call that we may need to further those discussions with the IMF to see whether or not there is an opportunity to soften the expectations, particularly if there’s going to be a negative impact on social safety. That aside, I think that it is not unreasonable to expect that there will be some adjustment. If there is revenue generation, that speaks to taxes. If there is cost cutting, unfortunately labour tends to feel the brunt of cost cutting.

“Of course, when you look at labour you are touching the social safety net which we can ill-afford to do at this time, given where we are with our society. So we are hoping that there will be innovations and public sector reform where we can determine where to tighten without affecting labour. But I don’t know if it is something that we can completely avoid,” the BPSA president warned.

According to the sixth IMF review under the current Extended Fund Facility, the Government committed to controlling its wage bill, phasing out COVID-related expenditures, reducing spending ratio, reforming state-owned enterprises (SOEs) and recovering outstanding revenues.

But Tannis favours the reform of SOEs which, in her mind, lack serious governance leading to tremendous wastage.

“We need to look at the state-owned enterprises with a high degree of urgency before we decide which of those two doors, or a combination of those metrics, needs to be employed,” said Tannis.

“Almost every year the Auditor General reports significant concerns. There are funds unaccounted for, reporting deficits in terms of the lateness of audits being reported, and the fact that there is missing documentation for expenditure, and so on and so forth.  That is why we are suggesting that before we look at those things that have a societal impact, that we look to stem the bleed first,” she added.

The BPSA president also called on the Government, before considering tax increases, to examine collection issues plaguing the country’s revenue agencies.
kareemsmith@barbadostoday.bb