Tax cuts, family benefits, resilience measures for ‘stronger Barbados’

Barbadians were given a raft of measures aimed at strengthening social protections, empowering families, and driving economic resilience, as Minister in the Ministry of Finance Ryan Straughn delivered his maiden Budget speech to Parliament on Monday.

In three-and-a-half-hour presentation, his first since his appointment in 2018, Straughn announced several proposals, including the addition of ten essential items to the 45 already exempt from value-added tax (VAT) under the Prices Compact; the removal of import duties and VAT on five types of fruit; an automatic annual two per cent increase in the national minimum wage starting January 1 next year; the introduction of statutory paternity leave for fathers and an extension of maternity leave for mothers.

The minister, dressed in a grey, collar-less, long-sleeve jacket featuring the Barbados Trident on his left breast and a carnation corsage on the right, also disclosed that mothers no longer need to give birth in Barbados to access these maternity benefits; they only need to be ordinarily resident in the country.

To further support families, particularly where a mother cannot provide primary care, Straughn announced that the maternity grant would be converted into a child grant to assist other relatives such as grandmothers who step in as caregivers.

Pensioners were also set to benefit from the Budget.

From income year 2025, pensioners will no longer pay withholding taxes on investments in government securities. Additionally, their income tax threshold will increase to $50 000—a measure expected to cost the Treasury approximately $3 million.

The government will also fulfil its promise of a one-off “solidarity” allowance of $300—tax-free—thanks to enhanced corporate tax revenues this year. 

“Every Bajan over the age of 18 years old and every person with legal status who has contributed to the National Insurance Scheme (NIS) in the last year will qualify for the solidarity allowance,” Straughn said. The NIS will administer these payments. Beneficiaries include contributory and non-contributory pensioners as well as individuals receiving invalidity benefits from the NIS.

In addressing water quality issues in St Lucy and St Peter—where residents have experienced discoloured water caused by rusty mains and silt—Straughn announced that a strategic mains replacement programme is underway. The timeline for this initiative will be reduced from 18 months to 12 months. Affected households will also receive an ex-gratia payment of $32 monthly starting April 1, costing up to $2 million.

As part of a Household Water Resilience Programme, the government will install 600-gallon water storage tanks with associated infrastructure and extend customs duties and VAT waivers on storage tanks and water pumps until March 31, 2028. Financing for this programme will come from the Resilience and Regeneration Fund with repayment over three years at an interest rate of one per cent.

Straughn also announced plans for a residential treatment facility for children requiring specialist care, which is expected to be operational early in the next financial year. To encourage more foster caregivers, stipends for foster parents will increase from $100 per week for younger children and $110 for secondary school children to $200 per week per child across the board starting April 1.

Daycare and residential facilities for elderly persons and adults with disabilities are also planned for St Philip and St Thomas.

Debt repayment featured prominently in Straughn’s presentation. He reaffirmed the government’s commitment to reducing its debt-to-GDP ratio from triple digits to double digits while maintaining fiscal discipline. 

“Contrary [to claims],” he argued, “this government is not increasing debt… It has been consistently lowering debt.” He added that any surplus performance this financial year would go toward further debt reduction.

A $5 million Home Improvement Fund sourced from this fiscal year’s projected surplus will provide microloans and grants for low-income homeowners seeking to improve their homes’ appearance. Additionally, Barbadians can expect enhanced cybersecurity through a new Cyber Security Operations Centre, which will monitor and respond to cyber threats nationally.

Other key proposals included monitoring renovated hotels’ reopening impacts on tourism; expanding and repurposing the Catastrophe Fund into a Resilience and Regeneration Fund; establishing compliance mechanisms within the fishing industry; and developing micro-insurance options for low-income individuals.

Minister Straughn concluded by reiterating that this Budget aims to strengthen Barbados’s social fabric while building a sustainable economy driven by innovation and productivity: “This roadmap continues government’s objective of national and economic resilience predicated on digitisation… It empowers ordinary Bajans… improving social cohesion.”

He called on Barbadians to contribute actively toward economic transformation: “Aided by strategic investments, prudent fiscal management, and unwavering commitment to our people, this government will continue to secure a brighter, more prosperous future for all.”

emmanueljoseph@barbadostoday.bb