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No more punishment, please!

Former prime minister Owen Arthur

Former Prime Minister Owen Arthur

Tread cautiously with fiscal adjustment!

That was the stern warning issued today by former Prime Minister Owen Arthur, as he addressed the annual convention of the ruling St Lucia Labour Party.

Pointing to a recent international study of fiscal consolidation programmes proposed for the 187 countries, Arthur cautioned that “excessive use of punitive levels of taxation and draconian reduction of expenditure” would only lead to severe economic contraction.

Indeed, if the 187 countries, including St Lucia, proceed full blast with their programmes to correct their fiscal imbalances by compressing domestic demand, the study projects that the world can be thrown into a deep new turmoil of global recession between 2016 and 2020,” he said, pointing out that the projection made in the research done by the South Centre, Columbia University and the International Labour Organisation was for a loss of seven per cent of Global GDP and over 12 million job losses over the next five years.

 Arthur therefore sees it as important for  countries to seek to avert this pending disaster “by setting out to correct their fiscal problems more by inducing economic growth, and less by new punitive tax and expenditure reduction measures”.

However, he advised the Kenny Anthony administration that it should resist calls for an adjustment to the country’s tax base “in a manner that can induce further financial instability”.

In this regard, he said, calls for the abolition of the Value Added Tax were part of “a political game and should be ignored”.

These calls are made to enable the Governments to be condemned for not doing that which in all wisdom and prudence cannot be done,” he cautioned.

Arthur also drew attention to a study published on September 15th by the Caribbean Development Bank, which is entitled Public Sector Debt in the Caribbean: An Agenda for Reduction and Sustainability.

He said it contains an in-depth evaluation of the root causes of the recent debt accumulation and presents some highly revealing insights, including the fact that “the largest recent contributors to debt have been the cost of off-budget events and activities.

Among these are the operations of public enterprises which have badly impaired balance sheets,” Arthur said, adding that “the contingent debt associated therewith has become the primary source of new debt in the region.

The former Prime Minister warned that this was now a major problem, which had to be confronted not only in St Lucia but, especially Barbados, where he said nothing short of a $200 million adjustment has to be made to the funding and operation of such enterprises.

Arthur, while  contending that integration was the best way forward for “broken” Caribbean economies and that Barbados was “the true Eastern Caribbean state”, also cautioned that fundamental issues related to the nature of governance, the political culture and the role of public enterprises will have to be addressed.

2 Responses to No more punishment, please!

  1. dave December 6, 2015 at 10:36 pm

    THE BOSS:When the Boss speaks -Listen !!!!

  2. jrsmith December 7, 2015 at 5:00 pm

    All talk , talk, the worlds economics problems, is because they were no satisfactory, economic adjustments, as to distribution of wealth across the globe. The rich got richer and poor got poorer. Taxes was the only adjustable revenue, which was hidden in every way possible. but also the rich was able to avoid paying the same, and enforcement made very easy on the poor.

    Most politicians, has become corporately corrupt, they themselves, having no new fixes , for this modern day economic crisies , which is making countries ,like the US, and NATO countries so unfortable , accusing little islands as like Barbados as so call tax heavens, only because they could never enforce certain penalties on corporates, which so many politicians is part of, this making collection of most of the taxing , very inefficient.

    I am beginning to think , that ,gradually , most so call democratic government , in the so call developed countries, would become ,
    dictatorships, as we see the new world order, gradually gain control. at present,… A London red bus and a half of people, is suppose to own ..68% of the worlds wealth.


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