Down the drain
Sinckler rejects new water levy proposal by the BES and opposition
Minister of Finance and Economic Affairs Chris Sinckler today rubbished suggestions made by both the Leader of the Opposition Mia Mottley and the President of the Barbados Economic Society (BES) Jeremy Stephen that the Government should do away with the controversial Municipal Solid Waste Tax and introduce in its place a new levy on the supply of water to private homes and businesses.
At separate meetings on Sunday, the two officials had put forward the recommendation in response to the growing public outcry against the municipal levy, which landowners – with the exception of some pensioners – now have until December 31st to pay in, based on a rate of 0.3 per cent on the improved value of their properties.
However, speaking to the media today, Sinckler said the move simply would not make any sense at this time, especially since the Government would be forced to consider numerous exemptions from a water levy.
“If you put a tax like that on water, water is metered. There are so many sectors you would have to exempt from the tax it would not make sense,” he said.
“All of the water-based businesses would have to be exempted and then if as Miss Mottley says you are going to pull those poor people or those below the poverty line out, then who are you leaving to pay the tax?” Sinckler asked.
“When you think about how much water hotels use, drink manufacturers, small businesses, you would have to do such a vast exemption in order for them to continue to be able to function,” he added.
In defence of the decison to impose the Municipal Solid Waste Tax on the improved value of properties, the Minister of Finance noted that with land “where you have a relatively stable price, and even if it goes up in terms of the valuation you can make the adjustment”.
He also pointed out that based on the outcome of the last two valuation exercises that have taken place “the government has not passed [the increased costs] on to the public.
“We freezed the valuations. In other words, we could have passed that on to the land tax bill. We freezed that to ease people. You can do that with a land valuation or a land based tax.”
However, Sinckler said “you cannot do that with water, because water is metered”.
“Everytime you use [water], you go up and we know that per capita, that people who are from a lower income bracket use more water than persons from a higher income bracket.
“Therefore the people who are suggesting this are not thinking. They need to apply some intellectual muscle to the thing and see we went through all of these permutations before we landed here.”
“People feel that we just picked land and said, ‘let us put it [the levy] on land’. The issue is nobody knows how a tax is going to behave until it is implemented. If you implement the tax and see that it has a pernicious effect on certain segments then you go in and make the adjustments. That’s how tax policy is done. But everybody wants to have their cake and eat it too, we cannot,” Sinckler stressed.
While insisting that the introduction of the Municipal Solid Waste Tax did not come about as a result of any knee jerk action, the Minister of Finance said: “We went through various permutations. We looked at whether we put it on water. When we started with the first proposal in 2012, we were looking at putting a small levy on insurable earnings through the National Insurance Scheme, but that could not work out because it would not have yielded anything significant because insurable earnings are limited as opposed to gross earnings.
“We had contemplated, and have since implemented the Consolidation Tax so that would have been an additional burden on personal incomes. We looked at the whole question of imports and we know why we cannot just put it on imports. It would be incompatable with our trade law agreements with CARICOM and the World Trade Organisation.”
To date Cabinet has only agreed to grant a 100 per cent exemption for pensioners with an improved value on their homes of $190,000 or less and to slash in half the rate payable by owners of agricultural land.
The Minister of Finance noted that the average bill was below $300. He also said that in spite of the widespread protests, people have been paying the bill.
Sinckler warned Barbadians that solid waste was a major problem in the country, noting that the last government tried to deal with it by going to Greenland, St Andrew, and spending $70 million.