Wrath of the punishers

Pat Hoyos,

Added 04 November 2012

sinckler

It is inconceivable that this self-proclaimed great economist could in this fiscal and economic environment, and with a world economy dramatically slowing down, proffer a set of proposals that would explode our fiscal deficit, set off massive leakages in the foreign reserves, deepen the balance of payments deficit and pitchfork the country straight into a devaluation of the national currency. – Minister of Finance Chris Sinckler, DAILY NATION, Tuesday, October 30, Page 4.In replying to proposals from Leader of the Opposition Owen Arthur to rekindle the domestic economy, Minister of Finance Chris Sinckler did not pull his punches. He raised the spectre of devaluation, and restated his Government’s policies of keeping its economic house battened down from the global economic hurricane raging all around it and continuing the punitive taxation of its citizens. In case you don’t wish to take your view of the world economy from just one person, here are a few other thoughts about what’s happening around us: “Amid the doom and gloom here in Europe, it is easy to overlook the fact that the global economy continues to grow at a reasonable rate. In fact, our main scenario is for global growth of 3.1 per cent for this year and close to its trend over the last decade.” – PwC analyst Richard Boxshall, September. “The [British] economy emerged from recession in the three months from July to September, helped by the Olympic Games. The economy grew by 1.0 per cent, according to official gross domestic product (GDP) figures, which measure the value of everything produced in the country.” – British Broadcasting Corporation, October 25. “‘The United States economy sped up in the third quarter as consumers and the federal government boosted spending and home construction accelerated . . . . In the July to September period, gross domestic product grew at a two per cent clip, up from 1.3 per cent in the second quarter,’ the Commerce Department said Friday.” – MarketWatch, Washington, October 26.  “Parliamentary Budget Officer Kevin Page says in a new report that he anticipates economic growth will brake to an annual rate of 1.6 per cent in the second half of this year, after slowing to 1.8 per cent in the first half . . . . That’s at the bottom of most economic forecasts and well below the Bank of Canada’s projections of growth rates of 2.2 per cent in 2012 . . . .” – Macleans, Ottawa, October 29. Imagine: Canadians complaining about a GDP growth rate of only 1.6 per cent. What’s the Central Bank’s projection for Barbados this year? “Real economic activity is estimated to have been stagnant for the first nine months of the year, mainly because of the lacklustre tourism performance, particularly during the summer months . . . . Real economic output is forecast to rise marginally for the remainder of 2012, provided the winter tourist season does not disappoint.” – Dr DeLisle Worrell, Central Bank’s nine-month review, October 30. Elsewhere in that release a chart puts GDP growth to September 2012 at 0.2 per cent. Flat as a Bajan bake. Is that a performance worth protecting, Messrs Sinckler and Worrell, as the “one path” forward, straying from which justifies the personal vilification of anyone who thinks we could do better? The Worrell-Sinckler mix of policies, which essentially punishes citizens and taxpayers in a failing effort to save foreign exchange, was demolished, metaphorically speaking, in a few sentences by Mr Arthur, in his speech at the Barbados Labour Party’s annual conference last Sunday, when he said:“It is very clear that most of those policies were recommended by the IMF [International Monetary Fund] – the increase in the VAT, the removal of the tax-free allowances, the new taxation on energy products, the increase in fees charged by Government agencies, the pursuit of macroeconomic policies to depress local demand, ostensibly to protect the foreign exchange reserves when they were at levels far in excess of the amounts needed for reasons of safety. “The reason why those policies must be reversed is not only because they have failed, but because their authors are now confessing that they have [not] and cannot work.” And that, dear friends, is why he incurred the wrath of the punishers. But after months of telling the country and the world that the economy was “stable”, the other economic punisher now simply says we have to hope for a good tourist season, otherwise more “tightening” will come next year:“If our winter tourist season does not live up to expectation, we are going to have more tightening.” – Dr DeLisle Worrell, DAILY NATION, Thursday, November 1, Page 4. The Central Bank’s own data shows that the fiscal policies of the Government have failed, for despite the increase in VAT last December by 2.5 per cent, receipts for this year to September 30 are down by roughly $20 million (Central Bank nine-month review, Page 11). People are not spending because they have no money to spend, thanks to the punishers. Another important number that is down is personal tax revenue, which is close to $30 million below its provisional figure for the same period last year (also on Page 11), despite the taxing of allowances for nine months. People are paying less taxes because more of them are unemployed. And unless things somehow turn around abroad, we can expect, under the present administration, more tax punishment and more frightening descriptions of the global fiscal environment to try to keep us cowering in fear.  • Pat Hoyos is a publisher and business writer.

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