Plea for ‘tax ease’ Budget
Minister of Finance, Christopher Sinckler, will tomorrow deliver the 2016 Financial Statement and Budgetary Proposals. It may well be his last, based strictly upon the unflattering performance of the Barbados economy throughout his stewardship.
Uncertainty and economic insecurity now choke and strangle Barbadians at every turn. A lack of creativity has defined the tenure of the Democratic Labour Party (DLP), with Mr Sinckler as Minister of Finance. Effective leadership has been lacking and an apparent reluctance for acting expeditiously has contributed to a badly damaged social economy.
In the 2012 Budget, Mr Sinckler had stated that the DLP stood committed on “a platform that prioritizes economic stability and growth, social advancement and security, and human, cultural and psychological development.” However, the facts indicate a falling standard of living, fall-back on the quality of life, and rising concerns over mounting social ills which are now badly affecting the society. The DLP has contributed greatly to the ‘backwardness’ enveloping Barbados.
With declining revenues and insufficient inflows of foreign exchange, the increasing exit of foreign companies from Barbados is problematic. The situation lessens Mr Sinckler’s room for macroeconomic manoeuvring. By not improving Barbados’ ‘ease of doing business’, the Minister’s interventions (or lack thereof) may push away even more companies and force displaced persons to join the unemployment lines.
In tourism, Barbados’ visitor spend, although increasing in 2016, remains below a threshold that would positively and significantly show the value linkage between registering increased numbers of cruise and stay over visitors and the Government distributing its social welfare programmes. Poverty has grown in Barbados, and Mr Sinckler must be clear on how his budgetary proposals will bring relief for many Barbadians feeling the effects of his previously enunciated policies of structural adjustment and stability.
Additionally, the foolhardiness of the DLP government to continuously rely on the Central Bank’s printing of money has been counterproductive for the economy and society. The failure of the DLP government to revitalize manufacturing and construction, and push small and medium enterprises to become more export-oriented have made more vulnerable the state of Barbados’ social economy.
In April, economist Ryan Straughn indicated that with Barbados receiving the latest of more than a dozen credit rating downgrades, it “clearly demonstrates that the Freundel Stuart administration has successfully fooled itself into thinking that the home grown Fiscal Stabilization and Economic Revitalization Programme is working”. He also contended then that the Finance Minister was persisting in “pursuing a path that takes Barbados closer to economic ruin.”
Barbadians are anxious to hear the overdue budgetary statement, and to examine the extent to which the Finance Minister proposes to arrest the situations of wastage, debt, and inefficiency. The Minister may want to draw on public/private projects that are being advocated in the interest of national development. Surely, few are convinced with Prime Minister Stuart’s premise that “the benefits are beginning to trickle down to our people once again.”
Given the country’s unflattering socio-economic indicators, and the mixed signals being sent to Barbadians depending on who is doing the talking, the anticipation for this year’s budget will attract the personalised question of ‘what is in it for me?’, while collectively saying to whoever will listen, that ‘we can’t tek it no more’!
Mr Sinckler must not get stuck on first quarter employment data. Nor should he be contented with political style over substance, particularly when many Barbadians are experiencing hard and strenuous times. Across the public sector and in sections of the private sector, the industrial relations climate remains unsettled at best. The DLP’s actions towards the trade unions have appeared more punitive than restorative or win-win oriented.
The vexing issues of low worker morale and low productivity attract capital’s attention and Government’s bashing of the worker. Generally, persons want:
· An end to the persistence of low wages and high prices;
· Policy and incentive instruments that encourage local investment while at the same time, ensuring that there is more disposable income in peoples’ pockets;
· Respect built on economic justice for trade unions and their memberships after wage increases have not been forthcoming in almost a decade;
· A halt to the growing size of the DLP-created category of worker commonly referred to as the working poor, and largely comprising many persons from the once flourishing middle class.
Considering that the build-up to the next general election is already underway, Mr Sinckler is likely to be reluctant to impose new taxes. Barbados, in the past few years, became home to an overtaxed population. Hence, householders and businesses will hope for taxation ease. Barbadians are also eager to know if the Governor of the Central Bank’s concerns regarding the foreign reserves are likely to invoke more stringent regulations and controls when it comes to getting and spending foreign dollars.
Plainly put, numerous Barbadians remain sceptical about this Minister of Finance’s plan to promote prosperity in Barbados. Last year, Mr Sinckler was saying in his budget that “the single largest issue facing the economy, is that economic growth in Barbados remains below the 2.5 to 3.0 percent that is normal for our economy.” With things pointing to another year of below par growth, many persons are doubtful that the DLP can fix an ailing and under-performing economy.
Can Mr Sinckler fix the economy, and will his fiscal management be able ‘to reinvigorate and deepen economic growth” to between 2.5 to 3.5 per cent of GDP? Will the Minister of Finance be persuaded by lessons of our history and practical experiences? In 1982, Prime Minister JMGM ‘Tom’ Adams stated that “while foreign exchange reserves can and have been augmented by judicious borrowing, this must be kept within strictly manageable limits and used for investment, not consumption purposes.”
More recently, former Prime Minister Owen Arthur cautioned that Barbados’ “foreign exchange reserves have fallen by half a billion dollars over the course of the last few years; this is not the time for the Central Bank of Barbados to be printing money to finance a Government’s deficit.”
Will Mr Sinckler heed the sage advice of two successful former Ministers of Finance? Meanwhile, the national uncertainty amounts to widespread economic insecurity. Sinckler must be empathetic to the poor, caring to the elderly, and able to deliver for the youth, of whom too many are unemployed or underemployed. He must inspire our business people who cannot get things going due to Government’s own lack of urgency in decision-making and failure to settle the state’s arrears.
This Budget will be pivotal in the shaping of Barbados. The economic insecurity is real but this writer hopes that the immediate future is not laced with more austerity and joblessness.
(Dr George C. Brathwaite is a researcher and political consultant and up until recently, he was editor of Caribbean Times (Antigua).