No single fix
Minister of Finance outlines three-pronged approach to bringing down deficit
As the Minister of Finance Chris Sinckler prepares to present his much-anticipated financial statement and budgetary proposals to Parliament in a couple of weeks time, he is assuring Barbadians that no major increases in taxes or layoffs are presently in store.
Sinckler has, however, left the door open to some level of new taxation, as he told reporters during a news conference on the economy at Government Headquarters on Bay Street this afternoon there were certain revenue-raising goals which the Government had to achieve.
While not getting into any specifics, he said it was necessary for Government to stay the course of its fiscal adjustment programme.
At the same, Sinckler said the ruling Democratic Labour Party administration intended to pursue a path towards major tax policy reform in the future, with the aim of broadening the overall base while reducing the rate of taxation.
“It is not our contemplation for any major increases in taxes. In fact, we may very well be looking over the short to medium term, if we can broaden the bases, to reduce some of the incidence of tax on Barbadians. That’s really where our goal is, but of course, as you know, we have a fiscal programme in place and we want to achieve certain targets. Therefore, we have to stick to what we have from time to time,” he said.
The minister also apologised for Government’s delay in paying tax refunds, while admitting that it was experiencing revenue challenges.
He pointed out that “refunds of all types: income tax, VAT, whatever the case may be, are paid from revenue” and that “there is no special fund kept anywhere out of which these funds are paid”.
Therefore, as revenue comes in, then those refunds are paid out of the revenue.
“If there are cash flow or revenue shortages, then you can expect that there would be a slowing of that process, and that has happened,” Sinckler said.
The Minister of Finance also addressed the very worrying topic of layoffs on the heels of the Government’s retrenchment of over 3,000 workers since the start of the year.
He assured that no major layoffs were planned, even as Government pursues further budget cuts in order to reach its deficit target of 6.6 per cent of GDP by March 31 next year.
However, Sinckler said spending cuts would be made in non-critical areas across ministries.
“There is a process of reforming statutory entities . . . and in that exercise it is normal to expect that there will be some attrition because if you have two entities . . . [with] two of similar positions and you merge them, and you do not need both, of course one may go.
“So you will find there may be some smaller attrition in terms of retrenchments because of the exercise . . . but not the 3,000 or the 1,500; not that type of thing,” he assured.
Last week, the Central Bank reported that the Government remained short of its deficit target by $174 million.
However, the Minister of Finance said it would not be using any single measure to reach its fiscal goal, such as focusing on taxes, borrowing or spending cuts.
He said a combination of these three would be applied.
“Permit me though to say that based on what we have achieved thus far with continued vigilance and smaller targeted interventions, we can achieve those targets without any further major economic or social dislocation in the economy or society,” Sinckler said.
Over the next six months, he said Government would seek to ensure that it contains the number and cumulative value of supplementary allocations to the budget approved by Parliament.
He noted that last year, such additional allocations amounted to $382 million. The goal this time around will be to keep this figure under $100 million for the remainder of the financial year.
ALSO If you sign up for Barbados Today before independence you could WIN a 2014 Honda City! Go here for full details http://bit.ly/1oCHnej.