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Bitter dose

Geralyn Edward

Bitter dose

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Barbadians were yesterday administered one of the most bitter doses of economic medicine since the 1991 crisis by new Minister of Finance Chris Sinckler.
Levying broad-based increases in taxes and user-fees, while at the same time offering significant support to several business sectors to help keep people employed and to pull the country from its economic hole, Sinckler said the aim was to reduce the fiscal deficit which balloned from $396.9 million in 2008/2009 to $712.9 million in 2009/2010.
The bitterest of the taxes was an 18-month increase in value added tax (VAT) from 15 per cent to 17.5 per cent, with Government expecting to raise $124 million.
Bus fares, which for 19 years stood at $1.50, will go to $2 from January 1, 2011, adding $8.4 million to the state-owned Transport Board.
And as the Opposition members grumbled in the background during Sinckler’s first Budget speech in the House of Assembly, he announced too, that long-standing tax-free allowances for travel and entertainment that boosted the salaries of many in the middle-class would be eliminated.
Also impacting this group was the removal of tax allowances for credit union savings and mutual fund investments. Sinckler said these two measures would save Government $34 million.
Another painful measure was the 50 per cent jump in the excise tax on gasolene. This is to raise $22.7 million.
From April 1, Barbadians who want their prescriptions filled at private pharmacies will have to pay user-fees. These drugs are free under the national drugs programme administered by the Barbados Drug Service.
The fees range from $5 to $12 for medicine that cost up to $40. Above $40, the fee will be 30 per cent of the cost.
Increases were also levied on Immigration services.
But as harsh as the tax measures were to swallow, Sinckler insisted the alternatives would have been “ten times more painful”.
“Our mission and mandate . . . must be to protect the ship of state”, he said, noting that it was better to maintain jobs and pay increased taxes than to make drastic cuts that involved job losses.
Taking a jab at commentators who advised to cut subsidies and transfers to public institutions, he pointed out that 75 per cent of those funds paid salaries, pensions and debt.  
“What these people are saying to this Government in coded language is that we should send home Barbadians. Cut jobs, retrench, lay off or otherwise sever hundreds, perhaps thousands, of public sector workers. . . . It is a policy prescription that this Government will not follow. We reject it the way in which it is being presented,” the St Michael North West MP said to loud applause from Government benches.
In 1991, public sector salaries were cut by eight per cent. Some 3 000 civil servants  were sent home as the then Democratic Labour Party (DLP) Government implemented an across-the-board two-year wages freeze.
But reaching out to the private sector, Sinckler abolished the environmental levy on imports, reduced fees paid by private transport operators (PSVs), reduced retail liquor licences from $1 000 to $500 with immediate effect and cut water rates for registered farmers.
Specifically, for small businesses, Government will guarantee a $50 million loan to the Barbados Investment and Development Corporation and $1.5 million to Fund Access.
Sinckler said Government would offer tax credits to companies that grew profits and increased jobs over the next three years.