Proposals too piecemeal

Proposals put forward by the Foreign Exchange Working Group of the Social Partnerships to help the Freundel Stuart administration shore up the dwindling foreign exchange reserves have been dismissed as “piecemeal” by one of the island’s leading economists.

The recommendations currently before Government for consideration include a hike in cruise visitor head taxes and airport departure fees and a full examination of the national import bill “with a view to identifying a list of non-essential items which would be subjected to higher tax rates and or quantifiable limits”.

The committee also recommended a stepped up programme of incentives with a view to attracting more investment to the island, major engagement with the international business sector with a view to making it easier for the sector to do business here, engagement by Government and the Central Bank with the high-end business and financial community on “a targeted programme of sterilized short and medium term loans”, the facilitation of  philanthropy by external high net worth individuals and remittances by the Barbadian Diaspora and frequent opportunities for domestic duty-free shopping zones where both locals and visitors can purchase items at duty-free prices in United States dollars.

However, making specific reference to the proposed rise in airport departure taxes, economist Jeremy Stephen said some of these recommendations would do little improve the foreign exchange reserves.

“Unless the whole purpose behind raising the airport taxes was more along the case of retaining taxes, being able to grow tax revenue, I as an economist cannot fully support the rationale of that leading to foreign exchange retention as such, given the fact that most departure taxes are paid in local currency to begin with,” he told Barbados TODAY.

He maintained that the focus needed to be on retention, and incentivizing the private sector “to bring money back home”.

He suggested this could include implementation of the plan announced by Minister of Finance Chris Sinckler in last year’s Budget, to create the duty-free zones.

“That would help with retention because that means essentially dollarizing the Barbadian economy; that is you’re gonna have a parallel spend in the economy based in US dollars on shore. That’s one way you could retain.”

He also pointed to the latest calls from the private sector to reduce the deficit, saying both the public and private sectors needed to do their part in that regard.

“A lot of classical economic recommendations have been made with respect to how you reduce wastage in Government spending, but there’s not been any necessary political will to force that on people just yet . . . but the reality of the situation is that private sector investment has been minimal at best the last couple years, without Government concessions somehow backing it,” Stephen said, pointing to a need for civic engagement from the business community.   

A second committee, this one mandated by Stuart to present recommendations on how to reduce the worrying fiscal deficit, had suggested an across-the-board 10-15 per cent rate of Value Added Tax (VAT) with no exemptions, concessions or zero ratings for any industry or sector.

It is a proposal that has not gone down well with political analyst Peter Wickham, who told Barbados TODAY he was sceptical about the benefits of such a move.

“If Government is concerned with increasing revenue, a reduction in Value Added Tax might not necessarily be the most helpful thing. I am more inclined these days to consider what St Lucia is looking at, which is the removal of value added tax and replacement [with] a sales tax… I wonder why the private sector might not have wanted to give consideration to that. A 15 per cent sales tax on everything as opposed to a value added tax which is chargeable against other expenses,” he said.

With Sinckler set to present the Budget before the end of next month, Wickham warned it ought not be a “giveaway” budget, as the Minister of Finance has to be fiscally responsible, given the current state of the economy.

“He cannot go giving away stuff as consistent with what people do during an election. And I also think he needs to send a message that he is able to deal with the deficit. He has created one in the Estimates, and I’m anxious to see how he will close it in the context of retaining popularity,” he stated.

marieclairewilliams@barbadostoday.bb

7 Responses to Proposals too piecemeal

  1. Tony Webster April 25, 2017 at 6:29 am

    “Piecemeal” refects the scope, and depth nof our current malaise. The New Barbados, requires a re-design, including the re-shaping of our psyche, so that we might achieve sustainability/ competitiveness in the current world (far less trying to create something which will be viable over the next 20-30 years). Whatever we come up with, it remains critical it is capable of being “SOLD”, to voters who are so now very comfortable in their own little ruts, that their first instinctive, knee-jerk reaction, will be to say “No” to anything but the most inane, gentle, aplication of medications…when reconstructive surgery is our only hope.

    Not exactly easy, or pragmatic, even when a governent is in a solid position…far less , with this hapless lot yet aroung our necks…when the bell is about to be rung.

    Yes, pray for our country.

    Reply
  2. Greengiant April 25, 2017 at 6:53 am

    Often time in this country when you place the most educated persons in a working group. The said group comes up short on courage, capacity to see or think outside the box, and lack political independence.

    Most of our scholars, civic leaders, business owners and professionals are too politically influenced or attached to these two main parties to present unbiased solutions. Most of our politicians too lack the bravery to select persons to any of these groups who they know supports the other party. That’s a quality that sets Owen apart from the others, his famous politics of inclusion has been the dividing rod with other members of the BLP. His effort to remove the elitism from the party has fractured forever a relationship that saw him choose to lead simply due to his popularity. Owen, though academically sound was never of the chosen class to lead the BLP or this country.

    Be careful what you wish for.

    Reply
  3. Alex Alleyne April 25, 2017 at 8:20 am

    Like like nothing else to TAX, so now it’s time to “raise” things.

    Reply
  4. Alex Alleyne April 25, 2017 at 8:21 am

    Look like

    Reply
  5. Saga Boy April 25, 2017 at 1:00 pm

    Same people who accuse the govt of being bankrupt of ideas..and this is what they come up with? The private sectors has never passed on any savings achieved through Gov policy to the consumers. The recommendations will impact negatively on tourism.

    Reply
  6. Helicopter(8P) April 25, 2017 at 3:32 pm

    When tourism was pushed during the Seventies it was a know fact that economic caos would rock through the Caribbean Island governments because they were islands which standard set of rules and regulation in business activitries were unfederated ! As far as the product goes each island has to be unique and outstanding in its end product to sustain constant foreign exchange. By this being so the best avalible prices and services at thrifty rates would be the best foreign exchange earner. Thats an enormous price to pay for a country that carries A- class standards of living so now we have to decide to live at a substandard while those who were substandard improve to a better standard of living. As seen as the globe turns.

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  7. Milli Watt April 25, 2017 at 3:53 pm

    Jeremy why don’t you leave this group a nuthinarians to themselves and let this thing implode. We grow based on debt that is the monetary environment we are hooked to. The economist worth his salt would advise strict spending, monetary expansion based on GDP and debt that goes to job creation in a manufacturing sector. You and Dr. Mascoll are not from the over rated business or political class hence the suggestions that preserve their self interest and create moral hazard from the crowd. leave them alone and let it FAIL.

    Reply

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