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THE HOYOS FILE: Where there is no vision, the economy perishes


Patrick Hoyos

THE HOYOS FILE: Where there is no vision, the economy perishes

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LET?THE?RECORD?SHOW, Mr Speaker, that this was written before the Leader of the Opposition’s reply to the Budget Speech of Minister of Finance Chris Sinckler. It therefore contains observations that are mine alone, even if they echo somebody else’s, and they don’t purport to be a full analysis.
It is clear that Mr Sinckler had a bad hand to play. He is facing a collapsing edifice called the Barbados economy.
It is my view that the administration he serves played a major role in its slow implosion by not acting as soon as it got into office.
Instead, it tried to maintain the myth that it was committed to lowering the cost of living while right off the bat raising gasolene prices massively, as well as water rates, and injecting a $104 million drag on the economy by putting up the fees Government charges for all manner of licences and permits.
Had it bitten the bullet and taken some overall measures like raising the value added tax (VAT) in 2008, a lot of these might not have been necessary.
So while I expected Mr Sinckler to raise VAT, he could also have balanced it by doing other things in an effort to create a holistic package.
For example, that rebate people now get if their income is below a certain level is really “guilty” money the Government gives you back for making people at the lower end of the spectrum absorb all the VAT.
That system could have been abolished if at the same time a much larger basket of basic goods had also been made “non-VAT” and retailers required to clearly show them as such, much like SuperCentre already does.
My friend, Colin Jordan, certainly does not agree, but I think the VAT charged on accommodation should also have been raised to whatever the final VAT rate was going to be, and whatever the additional revenue would have been brought in could have been used to reduce that final rate to, maybe, 16.5 per cent.  
Separate fund
Some of this money could also have been paid into a separate fund to promote Barbados’ tourism and offshore business sectors.
When I go abroad, I pay up to 18 per cent in various taxes on my hotel rooms. Nobody apologies.
The environmental levy should not have been abolished at this time because it muddies up the checking of whether merchants are gouging due to the VAT hike.
We are already paying it and therefore I would have preferred to see this remain in place and therefore allow the Government to avoid the confusion that is likely to reign over medical drug delivery in this country by not starting to charge.
Forcing people to pay on a scale of fees to get drugs on the formulary if they go to their pharmacist will create untold hardships on the poor and infirm, who will now have to probably take more bus rides to get to the Government pharmacies in order not to pay the extra charges, then wait in what are sure to be long lines.
This policy will also hurt pharmacies, many of which are already struggling to survive thanks to late payments from the Barbados Drug Service.
Is there more in the mortar than the pestle on this one, that is, some kind of payback at work here for the outspokenness of the pharmacies about not getting their money on time?
Lower-cost alternative
Maybe or maybe not, but it is anti-private enterprise as it provides a clear lower-cost alternative to using their services at a time when the Government is also instituting policies to encourage the growth of small business.
Are you saying that the only small businesses we want to help in this country are vendors and minibus drivers, Mr Sinckler?
The raising of the excise tax on gasolene is another blow to motorists and people who use their vehicles heavily in their business, and cuts right across the board to affect every driver in the country.
Meanwhile, the sudden removal of travel and entertainment allowances, which will cost up to $5 200 per year per income taxpayer, adds another huge burden and effectively destroys the original philosophical groundings of the implementation of VAT, that is, that direct taxes would be reduced in favour of indirect.
Both went up in one go this year.
Finally, and I will return to this in the future, there was little or no vision for the growth of the economy beyond a few million dollars to be spent on marketing tourism in the British media and investment via road shows in the United States and Mexico to be undertaken by Invest Barbados.
You can charge us as much as you like to work at our jobs and operate our businesses, Mr Sinckler, but your Government is also responsible for getting foreign investment and increasing our market share in tourism and the offshore business.
This is where your Budget was woefully lacking, Sir.
In essence, your administration is still waiting on the tide to come back in on those fronts, as has already been predicted by others.
This Budget did very little to address how Barbados could grow by more than the 2.5 per cent of gross domestic product which at least one ratings agency was predicting as long ago as April.

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