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Tax them!

Central Bank Governor defends new levies

Governor of the Central Bank of Barbados Dr DeLisle Worrell is defending Government’s decision to impose taxes on the population as a revenue raising measure, saying it was necessary to help close the deficit and maintain adequate levels of foreign exchange reserves.

Speaking last night on a television programme on the economy organized by the Central Bank, Worrell said it was necessary to raise taxes in order to control the amount of money leaving Barbados.

“In the short run, what you have got to do is you have got to reduce the imports. To reduce the imports you have got to reduce the spending power, the ability of people to import, and the tool that you use to do that is the fiscal. If you put more taxes then people have less disposable income,” Worrell said during the discussion on how to get the economy firing.

At the same time the economist did not ignore the need for Government to reduce spending, saying, coupled with increased taxes, it would help preserve foreign exchange reserves.

“Both of them have the effect of reducing the total spending power in the economy and that is what you have to do in the short run in order to get back into balance because we have got to get back into balance to have the secure foundation to go forward in the medium term,” he explained.

In his recent Financial Statement and Budgetary Proposals, Minister of Finance Chris Sinckler announced a new National Social Responsibility Levy of two per cent on all imported goods, as well as those manufactured locally for local consumption. The tourism, manufacturing and agricultural sectors are exempt.

Sinckler also announced an increase in the tax on bank assets form 0.2 per cent to 0.35 per cent, which analysts said could also have an impact on the population.

In 2014 Worrell had stated that the VAT system was “a mess”, unnecessary and unsuitable for Barbados and should be scrapped and replaced with “a simple sales tax”.

Last night, however, Government’s top economic advisor said if new taxes were not introduced, Government would likely have to decide whether it could afford some social services, an alternative, he said, Barbadians would not appreciate.

“I think that there is a consensus in this society that we don’t want any more taxes. If we don’t want any more taxes then we must face the issue of a realistic strategy for reducing expenditure and I think that brings the conversation to a place that Barbadians do not wish to address and we must address it, and that is the question of means testing,” Worrell insisted.

He cited Australia as one example among several countries that were richer than Barbados but did not offer free tertiary education.

“If they can’t afford universal freeness without means testing how come we can afford it?” he asked.

Asked what considerations were being given to areas identified for growth in light of the new levy which took effect on September 1, Worrell said, “you can’t have it both ways”.

He explained that the taxation policy was “a medium-term process” to protect the reserves, while ensuring “there is not a big hit” on any particular section of the society.   

Senior lecturer at the Cave Hill Campus of the University of the West Indies professor Winston Moore disagreed with the idea of means testing for education, stating it went beyond any individual and was necessary to eradicate social ills in the future.

However, Moore admitted the fiscal deficit needed to be addressed, adding that until it was dealt with foreign investors would continue to be uncomfortable about investing in Barbados.

“We can have best infrastructure and policy but if they are uncertain about where we are going as a country then they are not going to invest,” Moore warned, while advising the Freundel Stuart administration curb spending on wages and salaries, as well as transfers.  

6 Responses to Tax them!

  1. Hal Austin September 10, 2016 at 4:55 am

    Government must raise taxation, regardless of the shouting and screaming of ordinary Barbadians, who just have a hatred of paying taxes. They just want a tax-free free life.
    But, on the other hand, they will go the US, Canada or Britain and pay three forms of taxes – city, state and federal taxes, or in Britain, local authority, county council or national.
    What is wrong is that the government is imposing swingeing taxes on the poorest people and allowing the wealthy to get away Scot free.
    Also make companies pay their legitimate taxes or go out of business.
    What we need is a form of inheritance or death tax, removing company cars, school fees and other perks for personal use from corporate taxation.
    Road taxes should also be raised,while at the same time massive improvements in public transport and get rid of the silly ZR vans.
    At the same time the fees at public car parks should be raised from the ridiculous Bds$1 an hour to a minimum of $5 an hour.
    We also need to bring those people who deal mainly in cash in to the banking system by making it illegal for any one to conduct business in cash of sums above Bds$5000.
    We need to tax outlaw lawyers from acting as auctioneers and financial advisers, for which they have not qualified, and for those who are, impose new registration fees.
    We need a new visa fee, and for those who think this will impact on tourism, just look at Australia, the US, UK, India, and other countries.

  2. Tony Webster September 10, 2016 at 6:33 am

    @HalA. Who shall our Hitler/Thatcher/Barrow be…to give these policies any chance? Gearbox long gone too.
    What is a good name for our turd (sorry, third) party?
    Coalition Rum-or government-is not a brand we recognise hereabouts, far less drink of it.
    I too endured the orchestrated effort to inform, educate, and to warn of portents etc, but I was left under-whelmed, and if anything, MORE concerned. Fortunately, I have no vast riches to worry over, just a home and a pension (the latter indexed to C.O.L. by divine blessing).

    I wonder what the masses “took-away’ from it all? Were they listeneing/viewing? Did they run to the bank next morning to exchange those caches of greenbacks… for BB$?
    We cannot say we were not warned about menacing cat(s) awaiting us just round the corner……but as usual…the question remains: who shall step forth to attach the bell? You? Me?

    A guy like you, surely must have friends in the rating agencies (and other even more exalted entities) and could call a friend to help us start clawing our way back up the ratings-tree? I cannot recall anyone sucessfully paddling their canoe up a creek…sans paddle!

  3. chris hill September 10, 2016 at 7:08 am

    mr worrel is obviously off the is increased taxation to help the already dead retail sector bounce back. this is all about saving the government and giving them the money for their budgets. they have already cut social programs plenty. what about consolidation of gov agencies and statutory cooperations.
    such a lack of creativity, the DLP has become the Just Another Tax party. oh by the way have a happy 50th. hopefully some can have a shower by then.

  4. harry turnover September 10, 2016 at 7:08 am

    “in the short run, what you have got to do is you have got to reduce the imports. To reduce the imports you have got to reduce the spending power, the ability of people to import”
    ……yeah right ! cause the POOR people are THE BIGGEST IMPORTERS IN THIS COUNTRY and furthermore if you reduce the POOR PEOPLES’ spending power they might not even have enough to BUY ANYTHING LOCAL and that was necessary to help close the deficit and maintain adequate levels of foreign exchange reserves.
    Man you is the greatest ONE SIDED Governor of any Central Bank in the WORLD…..use ya RIGHT side sometimes na !!

  5. jrsmith September 10, 2016 at 5:59 pm

    TAX THEM this is from the (Central Bank Governor) he is as effective with his job as the try this ,try that government. He cant even give the people of our island positive financial predictions .
    The tax system in Barbados is set up for good friends , friends and family also them and us ,us the poor people the corrupt way in which tax avoidance is allowed to continue , in countries where there is some stable governments ( Companies and directors is sent to prison for the avoidance of paying (VAT) its a serious criminal offence..

    Why the (Governor of the Central Bank) wouldn’t forcefully expose the companies who is avoid paying taxes and he is so deceitful as to be saying , the government need to control the amount of money leaving the country they are all in it together ..

    If our (Priminister/ government ) was capable to manage
    Barbados with honesty, companies and who ever borrowed money from the Barbados government, as was published in the (AUDIT GENERAL’S ) report , should be rigorously pursued this is near to 400 millions BDs plus , please tell the people of Barbados why the government is not going after these culprits…

  6. Donild Trimp September 10, 2016 at 9:21 pm

    What a load of poop from this Governor of the Central Bank.

    For such a small economy as Barbados, the suggested measures equates to madness.

    Dr Worrell said, “if you put more taxes then people have less disposable income,” that is true.

    From the article we gathered he “did not ignore the need for Government to reduce spending”

    and that “both of them have the effect of reducing the TOTAL spending power in the economy” which is also true.

    Dr Worrell concluded with “and that is what you have to do”.

    That is the reasoning of a mad economist as it pertains to B’dos.

    As an economist myself, let me tell you Dr Worrell that “reducing the TOTAL spending power” in an economy as fickle as B’dos would cripple that country and bring its operations to a halt in less than six months.

    Please tell us you mis-spoke and did not mean “reducing the TOTAL spending power in the economy”.


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