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Increasing VAT not the answer

Natasha Beckles

Increasing VAT not the answer

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Former opposition leader Mia Mottley believes Barbadian middle classes are at risk of pauperisation and the working classes are at risk of marginalisation.
Speaking this morning in the House of Assembly, she highlighted the effects of the increased value added tax (VAT) and excise tax on gasoline.
“VAT hits poor people and middle classes the hardest and there has been no corresponding increase in the reverse tax credit which would ease the burden on those people who can least afford to pay,” Mottley said.
The Member of Parliament for St Michael North East said the VAT increase is not the answer.
“If you have an increase in a tax that is a discretionary spending tax, are you going to spend?
“People are going to hold back so now that the Minister of Finance has signalled that it may only be a temporary measure people will hold back until the temporary measure is gone.
“And while I understand his desire not to want to impose long term hardship on people, it may have the opposite impact in terms of restricting spending and triggering further recession in the economy,” she said.
Mottley noted that Barbados currently has a government which it cannot afford and said restructuring it could take three to five years.
She suggested that in the interim, rather than increasing the debt profile in a way that affects the country negatively, Barbadians should be facilitated in mobilizing their savings “so that they can help own assets that are now owned by the government”.