Change a Double Edge Sword

IT IS HARD TO BELIEVE. Add the July 7 Budget and the April 15 fuel price hikes, and in just six months the Government has taken over $180 million from the pockets of Barbadians.

 

 

It promises to put back $45 million in direct expenditure – mainly through the free bus ride scheme and agreeing to increases in reverse tax credit scheme announced by the last government. The Government plans to give back $1 for every $4 in extra tax it collected from the Budget. This is change all right. Small change!

Taking a net $135 million out of the pockets of Barbadian consumers will weigh heavily on growth. This is the kind of retrenchment Budget you would expect when the economy is in heady boom, not when global recession beckons.

Ever since 1929, when Herbert Hoover pushed the United States economy into the Great Depression through his insistence on a balanced budget, it has been the accepted wisdom that the role of Government is to add to spending in a recession, not take it away.

And don’t think that it will be the lawyers, bankers, insurance companies and truck drivers who will be paying increased Government fees and taxes. These fees will be passed on to ordinary consumers in a multitude of ways. The less scrupulous will add a bit extra along the way.

The Government has conjured up measures that both lower growth and raise prices at the same time, just as events in the rest of the world are pressing down on growth and pushing up prices.

Barbadians have been hit with a double whammy.

What will the Government be spending hard-earned tax dollars on? Paying the legal costs for the cancellation of the ABC contract.

Cancelling a contract without prior notice of grievance, just so it could be aired on the 7p.m. news, will likely cost Barbados $25 million of legal costs.
This is a gratuitous cost over-run.

Another uncosted item the Government will be spending money on is a new airport for Air Force CLICO and other private jets. The cost of building
a new runway, terminal, air traffic control, fire and emergency facilities would be a minimum of $25 million. This is a lot to spend when the existing private jet terminal is underused, a new airport is not required and the money could be put to better use building 200 new NHC homes in St Lucy.

But the Government did not announce a feasibility study, it simply announced it would pursue a new terminal. We know the PM has to offer Mr Kellman something to keep him out at sea, but do we all have
to pay for it? This is a new definition of squandermania.

In the Budget the Government announced a policy to attract philanthropy capital to Barbados. Philanthropy capital is the high finance term for charity. We are to beg rich foreigners to help pay for our schools and hospitals. There will be conditions.
But Barbadians yield to no one and we do not need
to do so.

Perhaps the PM has been too busy jetting abroad to have noticed that over the past six months, Barbadian shareholders of Barbados Shipping & Trading and Royal Bank have been paid over $500 million for their shares. It’s why our foreign exchange reserves
are so strong.

The Government should have tried to put this local money to work at home, by issuing a “National Hospital Bond” to finance a new hospital instead of selling the remaining shares in Barbados National Bank and Insurance Corporation of Barbados. Without a large and attractive enough domestic instrument, this money will find its way offshore. But that encapsulates this Government for you – bungled policies and bad policies mixed in with
missed opportunities.

Change is indeed a doubled-edged sword!

Not So Good Means Bad

THE RESULTS ARE IN. NATION readers have spoken. Seventy-one per cent of them have the same opinion of this year’s Budget – “Not So Good”. The figures might be skewed if only because there was no opportunity to vote for a bad budget. Nevertheless, there is no doubt that in this case, for this Budget, not so good equals bad.

As the effects of the Budget start to sink in, all the talk about social engineering will not replace absent policy for the international business sector or tourism, our chief bill payers. It will not clarify fuzzy economic strategies or vague platitudes about northern airports or offshore islands. Neither will it bring relief from the onslaught of new taxes imposed by the two rookie Ministers of Finance.

Individually and collectively Barbadians are in for a very rough ride when it need not be so. Every week is now going to be budget week for Bajans as taxes consume more and more of their pay packets. And to what end? Where are David Thompson and Darcy Boyce taking us? Back to the waiting arms of the International Monetary Fund?

Stagflation Well, we’ve been there and done that and it was not a pleasant experience. Without so much as a blink or a blush, the Prime Minister himself predicted further price increases and job losses by yearend. Stagflation is about to become the latest buzzword as growth in critical sectors starts to wither. To quote Richard Moody, an American economist: “There’s not enough lipstick to put on this pig.”

And don’t be fooled by talk of imported inflation. The greater inflationary effects of this year’s Budget are home-grown right here at Bay Street. From higher licence fees in almost every category, to increases in the environmental levy on every single item sold, to millions more in VAT – not a single cent can be blamed on the price of oil or imported food. These are solely the result of rookie tax policies that apparently do not take into account their impact on people’s lives.

There was a time when Bajans expected their Government to protect the vulnerable, not for the Government itself to be leading the charge of impoverishment, job losses, failed mortgages, business bankruptcies and higher and higher commodity prices. Times sure have changed. Just ask Serenader or RPB.

Brother’s keeper

Perhaps PricewaterhouseCoopers will be more prophetic than they know and we will all have to become our brother’s keeper, for it is clear that apart from carving out a few interest groups to bolster his party’s image and voter appeal, the Prime Minister has a blinkered view of economic prosperity for the rest of us. He does not subscribe to the view that you have to help the productive sectors so that everyone can be helped.

There is a pervasive current throughout the Budgetary proposals, both in revenue raising and concessionary measures that its authors either are not seized of the big economic picture or have a deliberately myopic view for purely political ends. Neither is good for the country.

We pledge again to hold the Prime Minister’s feet to the fire for the good of all Barbadians, regardless of political persuasion. We will not let him squander what Bajans have worked so hard to achieve with tawdry economic policies and programmes designed to keep himself and his party in power while the nation suffers.

It was in this spirit that our leader warned over a thousand residents of Christ Church last Sunday about the Cost-U-Less Trojan Horse. A good time to reflect on the old saying “Cheap t’ing no good. Good t’ing no cheap”. Especially if it means the demise of hundreds of small middlemen shopkeepers and minimarts.

Faith Healer from Deal

There was a faith healer of Deal Who said, “Although pain isn’t real, If I sit on a pin And it punctures my skin I dislike what I fancy I feel!”

 

 

 

THE PAIN from the Prime Minister’s record tax impositions on yet another Monday afternoon is only too real for Barbadians – $104 million in new taxes on the backs of Bajans already reeling from the draconian increases in fuel prices imposed by Mr David Thompson only 11 weeks earlier.

So overwhelmed is he by current global economic circumstances and outdated International Monetary Fund prescriptions that he could not find a single defensive stroke in support of our productive sectors. Absolutely nothing to spur growth or jobs. He played shots to every part of the economy all off the backfoot. His strokeplay was savage as he wielded his heavy, flashing taxation blade against every sector of the community. No one would be spared his wrath. From innocent children owning their first bike, to shopkeepers serving their communities, to young professionals just starting out, to tradesmen building our nation, to teenagers owning a cellphone, he hit them all for six.

His penetrating strokeplay will have far-reaching effects right across the economy. The increased cost of doing business will be passed on to consumers of goods and services at every level. Inflation is certain to approach double digits by the end of the year. Jobs will be lost and yet the captain found it in his heart to say that he was protecting the vulnerable.

Luxury islands off the West Coast, an executive jet airport in St Lucy and two new hotel brands a year were floated to show the Democratic Labour Party team’s ingenuity, but not a single concrete budgetary measure to make them a reality.

Well if the Prime Minister was on the economic backfoot on Monday, he was firmly grounded behind the crease on Tuesday night, his legs like cement, yapping asides across the floor. He was anchored on the moral backfoot – put there by the Leader of the Opposition.

Miss Mottley led from the front in making her assets and liabilities a document of the House and therefore a matter of public record. She also invited the Prime Minister to join her, as leader of his party, to do the same.

She gave the commitment that her members would submit their assets to the Governor-General to be held in trust until such time that the Integrity Commission was established and called on the members on the Government side to do the same. Further, she indicated that former Prime Minister Owen Arthur would disclose his assets to the House during his contribution to the debate, which he did.

What followed was the biggest display of squirming we have ever seen by one group of people, in any one place, at any one time. Suddenly, the entire Government was pedalling backwards faster than Barry Forde in his gold medal match sprint.

The last man to speak, the Prime Minister, was first out in the ‘devil take the hindmost’. He admitted precisely what the Barbados Labour Party (BLP) has been saying all along. That Integrity Legislation in a small jurisdiction is a delicate matter and can have a deleterious effect on capable human resources available to the Government. He then confessed that the Henryesque cut and paste adoption of the Trinidad legislation in their manifesto would have to be jettisoned. He was well and truly hoisted on his own petard pleading for understanding.

One thing was clear however – the baton of leadership of the BLP was firmly in the hands of Miss Mottley on Tuesday night. She demonstrated a keen grasp of the economic issues facing the country and the impact of the Prime Minister’s proposals and lack thereof. The legacy continues.

Southern Zone Conference