ALBERT BRANDFORD: No budget fever
MAYBE IT IS just me, but it seems that the long anticipation over tomorrow’s Budget has dissipated somewhat given the distance between announcement of the date and its arrival.
Nonetheless, if we accept – as the Minister of Finance has said he does – that Government’s budget was really presented in March when the Estimates were laid in Parliament, then what we can expect will merely be a financial statement with some revenue generation measures.
But money aside, there is always a political component.
Governments, no matter their circumstances, can be expected to keep their eyes firmly on the election clock even if, as in our case, it is only midway in this Administration’s second term.
In fact, some have suggested it might just be the ideal time for any political party to begin rolling the wicket.
So we will have to look closely at this financial statement to isolate the purely political elements.
Parenthetically, one unexpected element in the political mix this year has been the surprising resurgent militancy of the trade union movement within both the public and private sectors given its relatively laid-back approach in recent years.
Indeed, there was even talk about “one big strike” from the largest union which had appeared almost supine recently as the Administration was rampant in the advancement of its fiscal consolidation programme – the essentials being the hiving off of workers from central government and parastatals.
Now, here’s where I think the Government is going to attempt a dicey balancing act between the desire for cash and the need to keep its political support going in what is becoming an increasingly hostile climate.
In anticipation of Government trying to play the political card, one might be tempted to look for some kind of giveaways that is traditional for budgets in which previous ministers of finance have found methods of soothing the angry breasts of the masses while at the same time squeezing the wherewithal for such largesse from the rest of the pliant population.
But these are different times, and this budget is coming at a time – if you believe the official spin – when the economy might just be on the cusp of a rebound after seven years of no growth.
However, far from any thoughts of granting relief to those who have been suffering since the punitive first DLP budget of 2008, there are indications this minister of finance might be seeking to extract more taxes from a nearly dried-up well – not with any spectacular new taxes, but through a base-broadening approach that will net even more revenue as the taxable income rises.
A week ago, Minister of Finance Chris Sinckler at a City of Bridgetown Cooperative Credit Union function was clear in response to lobbying for less taxation to increase the spending power of Barbadians that Government had reached the limit where tax reductions were concerned.
“In the context of what we are dealing with economically,” he said, “fiscal consolidation is the mantra for the time being, because we have to protect our foreign reserves, ensure that we stabilise our public finances, ensure that we lay the platform for the kind of economic growth that will support the social services that we all enjoy almost free at the point of delivery.”
There is very little wriggle room for this Government as it seeks to boost sagging revenues, whilst responding to cries from ordinary folk as well as the business sector for relief.
As it stands, all eyes will be on how the minister deals with the controversial value added tax (VAT) which has been buffeted in the winds of political promises and betrayed by bureaucratic inefficiencies since its inception in January 1997.
There is no argument across the political divide that the VAT is “an important revenue producer”; yet, it has not been allowed to really settle down and do the job for which it was created.
A rate of 15 per cent was set at inception, and hiked to 17.5 per cent in December 2010 for what was to be a temporary 18-month period but was subsequently made law.
Now, we are hearing that the international financial institutions have been suggesting it should be reduced to standard flat 16 per cent “to facilitate the acceptance of the recommended base-broadening measures”.
Could this be Sinckler’s centrepiece?