PURELY POLITICAL: Budget Part II?
IT HAS BEEN a peculiar part of Barbados’ history that in some years there has been a formal presentation in Parliament of a Budget which, by the way, is not a constitutional requirement, and in other years there was not.
Many will remember Errol Barrow’s 1975 “Fireside Chat” on the state of the economy in sun-drenched Barbados in lieu of a Budget.
In other years, we have had what may best be described as a “Mini-Budget” such as former Prime Minister and Minister of Finance Owen Arthur’s August 23, 2005 second dose of taxes to counter Barbadians’ appetite for spending, particularly on foreign goods and vehicles.
Now, it is being suggested that current Minister of Finance Chris Sinckler may be about to present Barbadians with a sequel to his August 15 Budget when he makes a Ministerial Statement in the House of Assembly on Tuesday.
However, this Budget Part II may not spark a debate on the economy since the statement is unlikely to be accompanied by the requisite “take note” resolution, a mechanism that permits debate on the Budget.
It is being suggested in some quarters that Sinckler’s statement will be in direct response to the persistent and widespread criticism over aspects of his August 15 effort, which contained several errors and, according to the experts, failed the acid test of taxation with respect to the clarity and certainty of incidence.
While the Budget as a whole received some pushback from the Official Opposition and some economists, along with some members of the Cabinet – including the Prime Minister who initially said there had been unanimous approval of the Budget, but later famously said the controversial UWI funding proposal had not been written in stone – the main areas of contention were over the consolidation tax on gross incomes of $50 000 and over; the tax on bank assets; the municipal solid waste tax, along with uncertainty over the implementation of VAT on direct tourism services and the lottery winnings tax.
The statement is being regarded as a belated attempt to clean up the mess spread around by the Budget disaster more than three months later couched in the guise of a review of the some of the proposals.
Now, to be scrupulously fair to the minister, he had promised in the Budget that the 19-month Fiscal Adjustment Programme would be monitored by a special team which would be required to produce monthly reports for the Cabinet committee on economic policy.
“Quarterly updates will be given to this Parliament,” he said, “and ultimately to the public of Barbados by way of the regular economic review of the Central Bank on the state of the economy.”
On November 19, a Government release, which was responding to a NATION story on the failure to implement the proposed 15 per cent tax on lottery winnings, also informed the public that the governing pieces of legislation for the impositions had been completed or were in the final stages of completion, “and will be laid and debated in Parliament over the next three weeks”.
“When passed, together with the passage of the lottery winnings tax, they would represent the full legal implementation of the tax component of Government’s fiscal measures from 2013.”
It also said the administrative arrangements for the implementation of reduction of VAT on direct tourism services had been completed, communicated to the Barbados Hotel & Tourism Association and drafts amendments to the VAT Act to support the measure were also expected to be moved in Parliament in November (we are into December).
On the minister’s progress report, it said: “Particular focus will be paid to the implementation of the expenditure reduction aspects of the proposals announced.”
Those spending cuts, with a target of $285 million over the 19 months, were expected to impact expenditure areas most known to consume large amounts of Government revenue, such as personal emoluments, subsidies and transfers, grants to individuals and organizations, specific areas of procurement and tax expenditures.
“Government has been careful to design these expenditure adjustments in such a manner as to limit the potential for major job losses in the public service,” Sinckler said, “through instructing line ministries and statutory entities to use retrenchment as a last resort, while preferring to institute creative programmes for work hours/days/week reductions among staff.
“The Ministry of the Civil Service and the Ministry of Finance will assume general oversight of the implementation of this aspect of the measures so as to ensure that the targets are achieved while adherence to the preferred approach outlined by Government is maintained.”
Now, the Prime Minister is also the Minister responsible for the Civil Service, and the cold reality is that relations with his Minister of Finance have never been warm – to put it mildly.
With the spending cuts targeting substitutes, temporary and casual workers as replacements for appointed staff going on leave, and people not getting paid because they could not be found in the new fancy accounting system, it was a situation tailor-made for potential conflict.
Government’s mantra, so often repeated by Stuart, is that there will be no layoffs, and this is despite the fact that it has admitted to borrowing $40 million monthly to pay wages.
It may now be able to breathe easier with the Credit Suisse US$225 million loan in the pipeline and Stuart should be even better placed to keep his promise.
• Albert Brandford is an independent polical correspondent.