Harsh VAT move!
Chief spokesman on economic affairs for the Opposition Barbados Labour Party (BLP), Clyde Mascoll, has given yesterday’s Budget the thumbs down.
And according to president of the Barbados Hotel and?Tourism Association (BHTA), Colin Jordan, the 2.5 per cent VAT increase will impact on direct tourism services.
Mascoll and Jordan, panellists on Starcom’s Network programme?The First Reaction To The Budget, said the VAT increase would hurt and place hardship on households as well as businesses.
“It is not the kind of Budget that was required at this point in time,” said Mascoll, an economist and former Minister of State in the Ministry of Finance.
Mascoll criticised Government for reversing the tax-free allowance for travel and entertainment and removing the allowance for credit unions; the latter, he said, had been a major benefit to the average man.
He also denounced the imposition of an excise tax on gas up by 50 per cent to rake in $23 million.
“I don’t see how this Budget can correct what it set out to do. There is no imposition of revenue that is going to give you what you want. The growth has to come and from the growth you will generate the kind of revenue you want,” Mascoll said.
Jordan said the VAT increase would significantly impact tourism services such as meals, tours, cruises, car rentals and catamaran trips. He said a vacation was not a vacation unless it encompassed all of these things, and VAT would increase those costs even though the environment levy has been scrapped.
“I don’t think that as we seek to safeguard the economy that we should do anything that would affect foreign exchange earnings. We know the 1991 and 1994 period and we know what happens when the foreign exchange cover comes under threat. I think we need to be careful as we address revenue generation,” Jordan said.
Trade unionist Robert “Bobby”?Morris felt Minister of Finance and Economic Affairs Chris Sinckler had done a reasonably good job, and challenged the other panellists who queried the economy growing from the measures announced. Morris said it was a balanced Budget and he could foresee growth in another two years.
President of the Barbados Economic Society, Dr Winston Moore, said the economy lives and dies on what happens on the external market.
“If the external market is doing well, Barbados is going to do well. If the external market is doing poorly, then we are going to do poorly,” said Moore, who noted that the main goal of the Budget was to restore fiscal sustainability.
Moore acknowledged that the VAT increase from 15 per cent to 17.5 per cent would have negative implications for inflation and for the lower economic strata.
“The lower strata of society are the ones who spend most of their money on consumption, so it is going to have some impact on the distribution of income of most Barbadians,” he said.
NATION?Editor Emeritus Harold Hoyte took issue with some aspects of the content but felt that Sinckler made a solid presentation, while president of the Barbados Chamber of Commerce, Andy Armstrong, thought the Budget was balanced and was pleased that the environmental levy had been abolished.