The alternative to austerity

On 21 April 2017, I attended a public meeting by the Barbados Private Sector Association and was disappointed by their austerity-based solutions to Barbados’ dire economic situation. The Government, private sector merchants, financial institutions and individual economists are warning us to brace for austerity. Eight years ago, austerity meant forcing most Barbadians to access their savings in order to survive. Today, it means to force most Barbadians into poverty.

Approximately two years ago, Solutions Barbados published a plan to bring Barbados back from the brink of economic ruin without the austerity promised by others. The plan is based on proven solutions and is still relevant.  However, the Government continues to ignore this plan while stubbornly pursuing its strategy; while the International Monetary Fund (IMF) warns of devaluation.

We have shared our plan with anyone who will listen, including the National Union of Public Workers (NUPW) and the Congress of Trade Unions and Staff Associations of Barbados (CTUSAB). It was also published in both print and on-line news media, and also on the radio. To date, the responses have been overwhelmingly positive, because the plans are workable. The published plan consists of four main steps – none of which requires laying-off civil servants, reducing their wages, incurring additional Government spending, or begging other countries to lend us money.

Step 1 is to increase Government’s local currency revenues to run the Government and pay local currency debts. This can be done by reducing taxes on personal and corporate revenues to ten per cent of gross revenues – with no deductions. This will make taxes easier to calculate, pay and audit. It is also fairer. Currently, businesses pay taxes on net profits.  Therefore, it is possible to run a successful business for decades without paying any corporate taxes. 

However, since the Government must obtain revenue, the taxes that such businesses currently legally avoid paying are extracted from the rest of us.  Well, not under a Solutions Barbados administration. To facilitate the prompt payment of all taxes, all taxes previously owed to all Government departments will be forgiven and Value Added Tax (VAT) will be abolished. 

Businesses are currently being forced to pay VAT when they issue an invoice, rather than when they receive payment. This is unfair, because businesses may not get their invoices paid until months later – or never. Taxing businesses before they receive payment is an insidious method of taxation that can both prevent businesses from growing, and reduce their competitiveness.

The forgiveness of debts to Government should have happened as part of our 50th Anniversary  Jubilee celebrations. However, only a few select persons benefitted financially from those celebrations. Therefore, everyone will start with a ‘clean slate’. In exchange, all new non-payment of taxes will attract a penalty of 10 times the value of the outstanding amount for those who blatantly refuse to pay. Those who refuse to pay taxes under a Solutions Barbados administration will be competing unfairly in our economy, and that will not be encouraged.

Step 2 is to increase foreign currency revenues in order to pay for imports and service foreign currency debts. This can be done by temporarily reducing taxes on all foreign currency earnings to zero.

Step 3 is to increase productivity in both the public and private sectors, and reduce wastage and unnecessary costs in the public sector. This can be done by managing all public services to the ISO 9001 Quality Management System.  Parts of the ISO 9001 system can be implemented across the entire public service immediately, to the benefit (and relief) of those who deliver and receive Government services – at no additional cost to Government.

One low hanging wastage fruit is to stop public workers from paying income taxes. Currently, the private sector must pay additional taxes, which are then given to public sector workers, who then give it to the Government. The accounting bureaucracy and costs required to manage the taxation of the estimated 25,000 public workers can be easily avoided.

Step 4 is to depoliticize the public service. In a Solutions Barbados administration, public workers will be selected and promoted on merit alone.

Any of these steps taken by themselves will not pull Barbados back from the brink, because frustrated public services can frustrate the entire process.  Therefore, they must all be taken together. We need an increase in local and foreign currency revenues, and a better managed and depoliticized public service.

The Minister of Finance is strongly advised to examine our plan before we run out of viable options. We continue to be available to discuss it.

(Grenville Phillips II is the founder of Solutions Barbados and can be reached at NextParty246@gmail.com)

16 Responses to The alternative to austerity

  1. Greengiant May 3, 2017 at 12:45 pm

    I’ve taken special note that they’re no responses to this article. If this was the accustomed to BLP or DLP jargon there would have been several comments and opinions. I guess most of my fellow barbadians can’t relate to any proposal to improve the economic recovery and efficiency of our country unless it’s an opinion from the two leading parties or their economic mouth champions with political motives. We seem to be in a really sad place as a nation of people.

    Reply
  2. Kaiser Sose
    Kaiser Sose May 3, 2017 at 1:42 pm

    Austerity never works it deepens the recession, put more money in the economy to stimulate growth.ECONOMICS 101

    Reply
  3. Sunshine Sunny Shine May 3, 2017 at 2:04 pm

    Hello Mr. Granville

    I have given careful examination to your reduce, revamp and revitalise approach. That is what I am calling it. So believe the SSS when I say, it is with no doubt a very sensible approach baring in mind that all things work cohorently. The jist of the entire matter is that increase productivity results in increase opportunities for better services and greater chances for sustainability to work. Reduce in your current venture means the potential for increase spending since goods and services are not unreachable, while improvement in standards, cost of living etc is attainable. Revamp will ensure that the current system of governance is circumvent and examined to extract the better in the bad, and to introduce new measures to close the various pathways of wastage that is never subjected to high levels of accountability, transparency, and acts of the law. The revitalization approach requires that the collective set of measures imposed are given their new lease on life in a way that is stringent, open to criticisms and receptive to given ideals and opinions in a show of support for the People’s say. It makes no sense looking at the Barbados model for growth any more because the obstinanate position of those who approach the road that Barbados must take to remain onward, ever, upward, has resulted in movement that is backwards, downwards, and dubious. Let me say here that it would interest me very much to hear your teams response to the approach of absolutism that is currrently practice and ingrained in the system of political governance in Barbados. Will there be a greater responsiblity placed on the People’s say? Be that as it may, I like your ideas. Waiting to hear from you.

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  4. Samantha Best May 3, 2017 at 2:59 pm

    Solutions Barbados needs to do better than this! Are they really asking to be considered as an alternative to what exists now?

    The meat of the matter is missing. We have not been told how the hospital will be financed; how the public schools will be paid for; how the public servants inclusive of nurses, teachers, doctors sanitation workers etc will be paid. We all like to hear about reduction in taxes. But please Mr. Philips go into the details it is an austerity programme you are speaking about! You are not talking about a walk in the park or going to the Sunday School Class to listen to teacher and not being able to ask questions.

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  5. bradg May 3, 2017 at 4:28 pm

    The devil is in the detail. Lets hope that there is more depth and breath to the recommendations being advance by SB, and we are only seeing a high level summary here. I just don’t know how the country can get out of this mess with feeling some “pain” given where the country is at. Maybe SB is underestimating or oversimplifying what is needed to pull the country out of the hole, because they are faced with the reality of job.
    Nonetheless, i think their recommendations are food for thought.

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  6. Greengiant May 3, 2017 at 4:36 pm

    It’s actually the alternative to an austerity program @Samantha Best. It’s not an austerity program, it the simplifying of tax collection, the increase in disposal income, reduction in prices due to tax removal on essential items. This will generate increased spending, hence more taxes, develop a more efficient and productive public sector, reduce red tape to stimulate business creation and development.

    This is how we will finance education, improve our health services for a better Barbados to serve all. I forgot to mention helping people to become employable so we will have less unemployment. We will make Barbados for barbadians first, while welcoming our regional neighbors on a need for services basis. This basis will keep us within the treaty signed by Caricom heads. Our approach to managing the country’s affairs must change less we perish economically.

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  7. Samantha Best May 3, 2017 at 5:32 pm

    I understand quite clearly that it is an alternative to an austerity programme. That is the reason the details are needed so that they can be thoroughly analysed and decisions made as to which programme is beneficial to the country. Perhaps Greengiant you should present it since you seemingly understand what it’s all about. Mr. Phillips has not yet done that. Remember the electorate are the ones who must understand and support it, not the ‘boys in the club’. If the majority of the electorate does not support it, tough luck. It cannot be implemented. So try hard to convince the electorate

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  8. Tony Webster May 3, 2017 at 6:29 pm

    What might the I.M.F. think of these proposals? Where are the numbers?

    There is a lot of commendable blue-sky thinking here,and it’s true: the very earth here screams out for real change! However, the only way I can foresee such a government materialising ….of actually getting the necessary buy-in from a weary, ( but yet fearful) electorate, and actually convincing us that good times are ahead, and no one “going home”, would require the Bees and Dees,to form a coalition AHEAD of elections, comprising the best, most trusted brains of each, plus a cadre of private-sector brains in the wings and the Senate.

    The actual transition would make “changing horses mid-stream” look easy: such paradigm changes would require the putting-aside of party politics, like never-before seen: nothing less would give us the necessary ” re-moulding of Bim” , to surmount the possibility of system collapse, as such wrenching changes would certainly require huge short, mid, and long-term refinancing….which could only come from the I.M.F. at any viable interest-rate…hence my initial query.

    We are in a bind where neither mercies nor miracles will come easily to hand…and pain will teach us-and our children-hard lessons.

    initial query.

    Reply
  9. nextparty246 May 3, 2017 at 9:06 pm

    Dear Samantha and Bradg: Our details have been on our web-site, SolutionsBarbados.com, since 1 July 2015. There is a word limit on these columns.

    Tony Webster: Which of our policies lead you to think that we are relaying on mysticism? Please do not smear us. The most trusted brains of the BLP and DLP have brought us to the brink of economic ruin. On what basis are you recommending that we trust either of them again in this general election?

    Best regards,
    Grenville

    Reply
  10. Mikey May 3, 2017 at 11:08 pm

    The problem with people who see or hear something that sounds good, is that “TOO GOOD TO BE TRUE, THAT CANNOT HAPPEN”.
    When Errol Barrow talked about “free secondary education for all”, doubting Thomases asked “where d money gine cume frum”.
    Now we are cussing the present administration.
    Well @Tony Webster,,, a Coallition of Bees and Dees in the future is literaly “double trouble”, forget it. A double brew of old wine in new wine-skins is spillage and wastage.
    GET NEW WINES AND NEW WINE-SKINS EVEN IF IT IS A COALLITION OF THIRD, FOURTH AND FIFTH PARTIES.

    Reply
  11. Greengiant May 4, 2017 at 7:29 am

    Thanks mate @Mikey ; I can’t believe anyone could think of handing children back to two parents who had lived separate lives, each having the opportunity to care for the children as individuals and failed the children miserably. This is certainly not 21st child care.

    Strangely we are not asking a solutions silent BLP to spell out their methods for recovery. Having been involved in our political life from it’s very inception they should be able to present a working theory for all to scrutinize. Solutions Barbados however, as a party new to politics, but experienced in business principles are being asked to dot and cross it’s letters for doubters who seem to prefer a mixture of two medicines the made us ill. We seem not to realize that a combination of “roundup and Gramoxone” will not fertilize.

    The very earth, we trample on daily in this country is crying out for change, so why would we who see and feel the tears want a combination of two failed combinations political entities to govern our affairs. I call on all new political parties to come into the constituencies of this country and engage with the people now. Waiting for the bell to ring, is to the peril of the nation and it’s people. We have to sell our solutions to the masses, and we will obviously need time to convince them through answering their questions that our new approach has credibility and is based on sound business principles on the macro and micro scales.

    Reply
  12. Nathaniel Samuels May 4, 2017 at 8:58 am

    Sounds very ‘trumpish’ to me; it is sooo easy and now he realizes that running a government which has many constituents is not an easy thing. Let us get the real real details.

    Reply
  13. Helicopter(8P) May 4, 2017 at 1:05 pm

    I believe that after paying mortgage, utilities and a monthly food bill secondary expenditure for an average household comes in the form of transportation(gasoline, diesel). I think cutting down on fossil fuel imports and food bill are home economic ways of reducing deficit levels! This is a time of showing your true honor to nationality and not just a word and mouth situation. Our young men and women must be taught on good principals of leading this country into the future. It must be tackled collectively and please stop the silliness of partisanship in times of duress national matters it seems childish! I have good faith in our nation’s people and i’m sure there’s light at the end of the tunnel!

    Reply
  14. Solutions Barbados May 4, 2017 at 2:16 pm

    Dear Samantha, Bradg & Nathaniel: Our details have been on our web-site, SolutionsBarbados.com, since 1 July 2015. There is a word limit on these columns.

    Tony Webster: Which of our policies lead you to think that we are relaying on mysticism? Please do not smear us. The most trusted brains of the BLP and DLP have brought us to the brink of economic ruin. On what basis are you recommending that we trust either of them again in this general election?

    Best regards,
    Grenville

    Reply
  15. Greengiant May 5, 2017 at 6:19 am

    Those who are encouraging others to trust either BLP or DLP in the next election are doing so simply because they’re supporters of those two parties.

    Reply
  16. Jennifer May 5, 2017 at 7:21 am

    Barbados Private Sector Association and was disappointed by their austerity-based solutions to Barbados’ dire economic situation.

    This should be no surprise to anyone living in the real world of Barbados. I blame our SO CALLED leaders FULLY. You had a golden opportunity to oust, and bring these villains to their knees long ago and you did not. Instead you opted to join the devil in what is called integration. So now you got some even richer moguls who don’t give a damn as their children and grandchildren future is secure. Now the black man, woman and child who bears the 95% position in barbados is being thrown out of the sea to gasp for air like dying fish. We locking up black men in jail for a spliff while the true criminals were never brought to justice. You lot is as dumb as a stone. ALL OF YOU.

    Reply

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