by AfraRaymond Further details on property tax are needed to understand the process and possibilities arising from its implementation. The 2010 estimate of revenue from that tax was $325M, as against a 2017 estimate of $503M, so it seems that there has been some allowance for inflation and new properties. The innate effectiveness of this…
Further details on property tax are needed to understand the process and possibilities arising from its implementation. The 2010 estimate of revenue from that tax was $325M, as against a 2017 estimate of $503M, so it seems that there has been some allowance for inflation and new properties. The innate effectiveness of this tax is […]
This issue addresses governance in a regional country, do not expect to see the usual commenting here.
@ David at 6: 36 AM
Do you want to bet?
Done properly it is promoted by some tax policy experts as one method of reducing inequality of income.
It is also a method of ensuring those who earn income in the underground economy are captured within the tax net.
There is a danger that the information captured in the data base may be misused. That is an issue for those who want transparency and at the same time security.
The use of information technology has created another avenue for economic and social instability.
It played a big part in the recent USA presidential elections.
It played a large part in the financial meltdowns since the mid 1990s.
Financial companies were actually being paid in yesterdays liquidity. That is liquidity that was no longer on any bank’s balance sheet.
@Bernard
Thanks four your interesting comments, can you elaborate on the last one? What do you mean ‘yesterday’s liquidity’?
For me, this is a highly valid point
“It is also a method of ensuring those who earn income in the underground economy are captured within the tax net.”
Collecting, not levying, is the main factor in any tax today. The “cash economy” remains huge. It is understood by consumers that ‘if they pay cash’ they will not be charged tax in several business areas.
That aside, much of the entire tax system needs abolishing. It has become too complicated, which by design, creates work for accountants. DT’s “I’m smart” refers to the reality that ‘smart accountants’ can reduce one’s tax bill dramatically. And legally. The idea of wealth taxes, (property tax is a wealth tax) versus income tax, in combination with graduated consumption taxes appear much more collectible and targeted at ‘real money’ (wealth)
@ David at 10:50 AM
I am a little averse to describe methods of breaking the law to the public. It is somewhat like ” kiting” in banking. The only difference is that computer trading allows one to do it faster. This is the method that Leeson used. It is described in the book he wrote after serving time in gaol.
Eventually the culprit is caught after causing considerable discomfort in the financial system and the collapse of the institution in which he works.
@David
The name of the book is The Rogue Trader by Nick Leeson. He caused the collapse of Barings Bank in 1995.
He told one of his colleagues that he was wiring funds as collateral for a futures positions he had created.
Thanks Bernard, familiar with how electronic volume trading is used to accumulate revenue at the margin.
NorthernObserver November 10, 2016 at 11:36 AM #
The Arthur govt at the introduction of VAT stated that the present tax system would be phased out……then in 2008 the Thompson govt brought back taxes with a vengeance from small shopkeepers having theirs doubled to increases in road&land,just in their first year.
What different ways can a prospecting politician use to woo the electorate except to make promises?
What should primarily influence taxpolicy. Should it be greater input from the technocrats read civil service or be left to the whim and fancy of politicians.
@ NO at 11 :36 AM.
I agree.
The emphasis of tax policy should be ease of collection. A complicated tax system discourages the taxpayer and creates job opportunities for tax accountants.
The property tax in theory is a good tax . One must guard against having it impact negatively on the middle and lower income groups. So thresholds have to be set high and must be graduated.
Will Governments have to create land banks for those who fail to pay property taxes?
@ David at 12: 55 PM.
In days of yore, The technocrats advised the politicians on tax policy. They also had to do the mathematics to convince the politician that the outcomes , all things being equal,were achievable. It was an iterative process. The politician,even if he is technically qualified , did not advise or treat himself. As far as I remember neither Mr. Barrow nor the two Adams did this.
Technocrats of today appear not to have the skills to manage their bosses, the politicians. Or worse yet are not consulted. I think they are still very highly qualified by education and experience on the job.
@BC
Land banks per se are usually politically undesirable. They are like a fish pot, they sometimes catch that which one might not choose to.
However, there has to be some penalty and collection method, or there is no reason to pay?
I am not familiar enough with the laws of Barbados to know exactly what remedies would exist for the collection bodies, and what information can/cannot be made public.
Property Matters – Tax Facts
by AfraRaymond
The controversial property tax is now expected to be implemented in the fiscal year 2017 and is estimated to raise $503 million. That is a mere 1.7% of the total revenue estimate of $29.93 Bn from taxation. So why is it so controversial? How will it be implemented? How much can we expect to pay? […]
@David November 10, 2016 at 12:42 PM and @Bernard re “… familiar with how electronic volume trading is used to accumulate revenue at the margin.”
Certainly no expert in the financial markets but of course there are at least two other major issues re electronic trading that roils markets often to a disadvantageous position to any ‘small operator’.
-** Of course there is the wide spread automated trading itself which can move billions in a market based on pre-programmed buy/sell limits. That has proven to be quite dangerous and is/was at fault in 2008 and many other major markets swings.
-** But much more odious in many ways are the trading ‘dark pools’, high-frequency traders and use of super fast ‘pipes’ to front-lead trading and essentially make margin (quite sizable) on the news of big trades. I did not read Leeson’s book but I can advise an absolutely eye opening, good read from ‘Flash Boys: A Wall Street Revolt’ by Michael Lewis.
Wall St and the world of finance is of course a ‘rigged’ game: everyone knows the rules and basic dynamics but some know and play in at a level way beyond the normal and the big boys always comprehensively whip the backsides of the lil boys !
Can anyone wrap their heads around an investor heading home early from Trump’s presidential acceptance gala to go trade a $Billion when he saw the great opportunities as the market ‘cashed’…
…can one comprehend why Amazon stock should be slipping because of some perceived spat between Trump and CEO Bezos which the markets project will result in actual economic retaliation.
Smoke and mirrors (almost beyond normal comprehension)!
LOLL…re “…That has proven to be quite dangerous and is/was at fault in 2008 and many other major markets swings”.
I am not saying that the 2008 crash was caused by automated trades. That would be a hoot. But such trading can accelerate a bad situation at a given point in time to a tune much worst than what human trading would cause.
dpD at 9:01 AM,
I agree with your interventions above. Could not be better put. But each Era brings its own seed of destruction.
So Bush Tea will have to add Information Technology to his litany of sins LOL!!!!
Not even his famous whacker will be able to deal with this new abomination . Or will it?
@Alvin
Are you aware bond holders in Grenada a few year’s ago had to take a haircut ten cent on the dollar?
@ David at 1:27 PM.
Do not put any such ideas in Alvin’s head. I have bonds. I hope those in Grenada were corporate bonds.
Investors holding gilts or government bonds are always at risk of suffering a haircut. Retail investors should not be lending money to the government.
Government bond are mainly for institutional investors, especially banks and insurance companies. Corporate bonds usually give higher returns, and if an investment vehicle is returning higher than usual it is high risk. Corporate bond can easily become junk.
I expect the Barbados government to default on its bonds any time no. It is bankrupt.
@Bernard
If memory serves the vehicle was government treasuries, will have to research it!
Here is the parallel underground conversation taking place in Trinidad. It is important given the significant investment T&T has made in Barbados and the Eastern Caribbean.
The latest Central Bank report from the disastrous and damaging Central Bank that is partly responsible for our economic situation confirms what some of us have been warning about: forget the IMF forecast of recovery in 2017, the economy is still falling and not stabilizing, the govt’s economic trickle-down program or what passes for one will be a catastrophic failure, and we face an economic depression, for many years, UNLESS the govt starts economic diversification, economic stimulus, stop the senseless austerity/trickle-down economic strategy, and drastically change (with Central Bank) the monetary and fiscal programmes and strategies. The Central Bank seems clueless, at sea, backward, totally theoretical and not practical/pragmatic, and totally incapable.
You cannot get a magical and miraculous V-turn in economic performance from a minus 7% to even flat or growth in a few months! Why do you allow yourselves to be fooled, again and again? We have no economic policy now that will achieve anything near that! Get out of your funk, people & govt of T&T, out of your delusion, and face reality!
Do not expect OIL & GAS to save us, it will not happen! There has been and there continues to be an epochal transformation of the global energy environment. Our energy & petrochemical production is falling even while prices remain low and will be so for the foreseeable future. The world is also moving away from fossil fuels. There is change but we insist on trying the recreate the golden Pt Lisas era, going back to aluminium and smoke-stack industries, trying the strategies of the past in a vastly transformed global economy that is barreling ahead, leaving us in the dust, painfully and pitifully trying the old & failed strategies.
There must be CHANGE. What we are doing now — especially in crime and economy — are not working, they are not applicable to our situation, and will led to further economic decline and a horrendous and deadly crime rate. It will be not just zero zero zero but minus minus minus for a very long time with dire social consequences if we do not stop the stupidity and change, now. It is not too late but we sinking further into economic & social disaster and we must act now to save this nation.
As many have urged, including recently the American Chamber and IMF, the nation must focus on economic growth and not austerity and trickle-down economics. The govt has to stop all these brainless vanity projects and focus on projects that will create jobs, generate new revenue streams, sustainable development, grow agri & reduce food bill, grow tourism, improve transportation system, reduce fuel consumption with more to export and go greener, promote productivity, reform Public Service with modern methods to deliver government services as a first step, completely change the current crime plans and focus on stopping the flow of drugs/guns/illegal immigrants/forex, and must change the forex system – smash the illegal forex system that is draining billions of precious forex, change forex allocation, and stop favoring the rich & powerful while pressuring the poor, vulnerable, and middle-class.
The government must unite the nation to work together to confront this crisis and emerge with as little permanent damage as possible. The govt has to demonstrate it will be fair to all, it will not favor their financiers and the top 5 % of the society while paying lip service only to the other 99% of the people, the govt must stop trying only blame and focus on now & the future, the govt must take concrete action to stop corruption/waste/cronyism/nepotism, and the govt must convince the people that the sacrifice the people are making will not be for the rich & powerful but for the benefit of T&T.
In other words, there must be an extensive and drastic change in government policy. Austerity and trickle-down economics are backward & failed strategies that will destroy this nation. We are at the point of diminishing returns from higher taxes on the people. The current forex system has already bled this nation to the tune of billions and will also destroy us if we do not take action now.
The illegal forex market & parallel economy are growing very fast and will destroy us. The influx of guns/drugs/illegal immigrants and forex will soon turn us into a full-fledged narco state with the govt and citizenry losing control to the narco trafficantes.
We are in the danger zone, we must act now, the govt has to govern for T&T and not the party and financiers, the govt has to unite the people and take charge, in a genuine & patriotic manner, rather than to satisfy their partisan false ego and pride.
And, the people of T&T must participate and involve themselves so that we will survive and recover from this serious crisis. The people must advocate, put aside partisan politics, and must insist on better governance.
https://guardian.co.tt/business/2016-11-12/gdp-declines-67-cent
@ David at 9: 46 AM.
Surely 75 % of the above has been the subject of discourses on BU over the past two years or before. Same play different theatre.
It has always been my view that we obsess over ratios such as Debt / GDP and Public sector/ GDP , without analysing these ratios and asking what do they have to do with economic and social wellbeing of the citizens.
We tend to concentrate on the numerator and not the denominator. If the denominator of the fraction increases then everybody is OK; so concentrate on increasing the denominator. All other efforts are exercises in futility.
More over when the G20s are faced with these same problems ,they engage in stimulus programs. They run trade deficits, fiscal deficits, print money ,increase national debts. In short all the opposites which they recommend for small emerging economies.
So I hope T& T take on board some of the concerns which the author above has expressed
@Bernard
Your quote:
They run trade deficits, fiscal deficits, print money ,increase national debts. In short all the opposites which they recommend for small emerging economies.
Do SIDs have the capacity to employ the above opposites?
@ Bernard Codrington. November 12, 2016 at 1:25 PM
“More over when the G20s are faced with these same problems ,they engage in stimulus programs. They run trade deficits, fiscal deficits, print money ,increase national debts. In short all the opposites which they recommend for small emerging economies.”
You are forgetting these same G20s have their own tradeable currencies underpinned by a relatively well established manufacturing base and supported by organized food and commodities producing agricultural and mining sectors.
Two bit countries like Bim have no such economic foundations with a range of fiscal and financial tools in its kitbag.
So if the size of the denominator is the key what should Barbados do when it shrinks because of factors outside the country’s control? The fall of the British currency would result in less spend by British tourists who make up the largest slice of long-stay visitors to Bim.
Yet you deliberately fail to see its pending impact on the Bajan economy. What do you think would be the size of the “social cost” ratio when the fiscal numerator increases and the foreign exchange denominator shrinks?
@ David
My point is that T& T and Barbados need to transform the Economic structure in order to increase GDP and reduce the dependence on one or two sectors to achieved sustained economic growth. We have employed all the above opposites before to reach where we have reached today.
Foreign Direct Investment does not take place unless Imports exceed exports. That is a trade deficit..
Fiscal deficits can only be financed by government borrowing,through central banks overdraft, issue of government debentures etc. or more taxation. In the latter case there is no fiscal deficit. Revenue matches expenditure.
So the answer is yes. But it must be carefully managed. One must have the capacity to manage it .
@ Millar
As long as some persons view Barbados as a two bit country. It will always appear to them as a two bit country. Thankfully many of us do not think so. And many well thinking foreigners do not think so. So I cannot respond to your queries since I do not share your premises.
@ Bernard Codrington. November 12, 2016 at 2:01 PM
What a cop out after making such a bold assertion about the need for good management. To quote you: “So the answer is yes. But it must be carefully managed. One must have the capacity to manage it.”
Given the quality of fiscal management since 2009 would you place Barbados in the top 20 as it was in 1992?
Barbados has had its economic days in the Sun. Its days of punching above its weight are over.
Do you really feel a country that can’t even get the rubbish and weed removed from the collapsing rod network or curtail the spillage of raw sewage onto its streets should be considered anything else but a two-bit country?
Look at Singapore and you will see a small country that is certainly not a two-bit country and was even below Barbados weight division before the 1970’s.
Why not help the country get back on its feet by changing the political board of directors?
Excuse me. But has Barbados ever been a top economic nation since the 16th century – even that was based on land value and the cost of sugar? Or have I missed something?
In the mid naughties the former Governor of the central bank, Marion Williams, called Barbados a first world nation. And he was the governor of the central bank.
Let us look at the last 50 years: was it the decade 1966-76; 77-87; 88-98; 99- 09; 09 to now?
Pls explain.
@ Miller 2:43 PM
Barbados is my country of birth. I have always made my contribution to the good management of its social and economic affairs. And I will continue to do so when I am in a position to do so.
I do not share your pessimism. All the ills that you have listed about the current management I am aware of. So you do not need to ask me to help my country.
You want me to be a politician or worse yet you want me to declare my hand. Nice try.
Wheel and come again. At least I have identified one agent provocateur.
The challenge Bernard will always be to get people to think differently and not stay mired in old mindsets.
@ Hal Austin,
When one refers to Barbados as a top economic nation one compares it to other nations in the world with respect to the quality of life of its citizens. Specifically one compares the income per capita of the citizens,their access to health care and education ., the mortality rate . , the quality of its communication systems including road s seaport ,airports etc.
By any standard Barbados is not anywhere in the bottom 2/3 rd. Do you wish to say that during the last fifty years there is no decade where Barbadians had a reasonably good quality of life?
Bernard,
Quality of life is a different measurement to per capita GDP. I never said Barbados was at the bottom, or even the 2/3 of the global economies. I asked for sound macroeconomic evidence of this imaginable dynamic island-economy. We can all talk nonsense of how well the Barbadian economy is doing or has done, but it is another thing presenting the real facts.
Let me help you: Barbados has under-performed the region and the global economy since the end of the gold standard by Nixon. Further, the debt-driven development that we experienced during the 14 years of Arthur’s leadership has plunged us even further down the development chain.
Cutting out the propaganda, where is the real evidence. We are all romantic and I will swap the comforts of Europe and North America any day just to live in the Ivy. But I will be fully conscious of my choices.
The company of the family and friends I grew up with will be preferable to any amount of material possessions in a cold and damp winter.
But I am sure you are not talking about the shabby main thoroughfare, Broad Street, where drunken people urinate openly in the side alleys; I sure you are not talking about the single general hospital where people can wait in A&E for hours to be attended to; I am sure you do not mean the chaotic public transport system; I am sure you do not mean the highly dangerous motor vehicles drivers that pester the roads and endanger pedestrians with not a police in sight; I am sure you do not mean the declining educational system that is not fit for purpose; I am sure you do not mean the incompetent business class that allows the Trinidadians to take every promising business off them; I am sure you do not mean the grossly incompetent civil service still bogged down with their paper files; I am sure you do not mean the criminal justice system, headed by a bone-headed attorney general, where people can be on remand for ten years or more; I am sure you do not mean the civil justice system where cases can remain on people’s desk for 20 years; I am sure you do not mean the thieving lawyers.
Where is this progressive Barbados\?
@ David at 3:13 PM
But Barbadians have always thought differently. And we have changed our mindsets at the appropriate times. We appear to be cautious but we examine everything carefully before we jump in. We do not follow. We lead. We are a pragmatic people. We have implemented the most social democratic society in the Caribbean without all the jumping and waving that other countries in our region engaged in. We are still the most progressive.
There is plenty of tweaking to do if we are to regain or maintain those standards. But we must be rational. We must avoid demonizing our opponents and stick to the issues.
It would be so nice if persons of Hal Austin’s persuasion would light a candle instead of cursing the darkness.
Sorry Bernard,
What is that in plain English?
@Bernard
The perfect measure of where we are is to measure based on the current state of play. To dangle what we have done in the past is nothing more than to engage in sentimental behaviour which challenges your position we are a pragmatic people.
@ Bernard Codrington. November 12, 2016 at 3:49 PM
“But Barbadians have always thought differently. And we have changed our mindsets at the appropriate times. We appear to be cautious but we examine everything carefully before we jump in. We do not follow. We lead.”
They say when a man is down for the count you should never kick him in the ass.
So we will leave you to wallow in your jingoistic memories of a bygone Barbados when well-managed Bim was indeed king of the hill of public administration in the Caribbean and a role model for developing states especially those emerging from a colonial past and in the hands of a black educated elite and political class.
What once made Barbados good enough to punch above its weight and to be highly respected was not any well-endowment of natural resources but a canny ability to not only live within its fiscal means but also to make five salt breads and two flying fish go a long way in feeding thousands especially in the areas of education and health. In other words, good management of the very limited resources available just as any wise housewife.
But how can you continue in a most arrogant manner with your arrant nonsense of being the modern leader of the pack? Who own and control the commanding heights of the economy if not foreigners or those classified as the nouveux arrivants of economic success from the East?
Who own Sandals, Massy and to rub salt in the-wound Republic bank, if not the same people who you in jingoistic stupidity believe look up to Bajans for leadership?
The only thing in which Barbados is in the lead under the current administration is in the race to achieve the most and fastest number of credit rating downgrades and the highest ratio of indebtedness in the region.
Look around you mate, the signs of decay and rot are all there to see. The most recent overflow of sewage on the streets of a prestigious strip of the golden mile of the last fully working cylinder of the economy is evidence that the shit has hit the fan.
Only a major surgical procedure involving total amputation of the political hand currently at the helm of state can save the few remaining but poorly functioning inner organs of the polity.
Get real B C, you and your lot have been played for suckers in the grand political game just like the rednecks and other malcontents are being taken for a ride by the pied piper of Trump Hall.
I wonder how much land the govt of Bim owns?
http://www.nationnews.com/nationnews/news/89254/whites-major-landowners
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