Grenville Phillips II, leader of Solutions Barbados
On 21 April 2017, I attended a public meeting by the Barbados Private Sector Association and was disappointed by their austerity-based solutions to Barbados’ dire economic situation. The Government, private sector merchants, financial institutions and individual economists are warning us to brace for austerity. Eight years ago, austerity meant forcing most Barbadians to access their savings in order to survive. Today, it means to force most Barbadians into poverty.
Approximately 2 years ago, Solutions Barbados published a plan to bring Barbados back from the brink of economic ruin without the austerity promised by others. The plan is based on proven solutions and is still relevant. However, the Government continues to ignore this plan while stubbornly pursuing its strategy; while the IMF warns of devaluation.
We have shared our plan with anyone who will listen, including the NUPW and CTUSAB. It was also published in both print and on-line news media, and also on the radio. To-date, the responses have been overwhelmingly positive, because the plans are workable. The published plan consists of 4 main steps – none of which require laying-off civil servants, reducing their wages, incurring additional Government spending, or begging other countries to lend us money.
Step 1 is to increase Government’s local currency revenues to run the Government and pay local currency debts. This can be done by reducing taxes on personal and corporate revenues to 10% of gross revenues – with no deductions. This will make taxes easier to calculate, pay and audit. It is also fairer.
Currently, businesses pay taxes on net-profits. Therefore, it is possible to run a successful business for decades without paying any corporate taxes. However, since the Government must obtain revenue, the taxes that such businesses currently legally avoid paying are extracted from the rest of us. Well, not under a Solutions Barbados administration.
To facilitate the prompt payment of all taxes, all taxes previously owed to all Government departments will be forgiven and VAT will be abolished. Businesses are currently being forced to pay VAT when they issue an invoice, rather than when they receive payment. This is unfair, because businesses may not get their invoices paid until months later – or never. Taxing businesses before they receive payment is an insidious method of taxation that can both prevent businesses from growing, and reduce their competitiveness.
The forgiveness of debts to Government should have happened as part of our 50th anniversary jubilee celebrations. However, only a few select persons benefitted financially from those celebrations. Therefore, everyone will start with a ‘clean slate’. In exchange, all new non-payment of taxes will attract a penalty of 10 times the value of the outstanding amount for those who blatantly refuse to pay. Those who refuse to pay taxes under a Solutions Barbados administration will be competing unfairly in our economy, and that will not be encouraged.
Step 2 is to increase foreign currency revenues in order to pay for imports and foreign currency debts. This can be done by temporarily reducing taxes on all foreign currency earnings to zero.
Step 3 is to increase productivity in both the public and private sectors, and reduce wastage and unnecessary costs in the public sector. This can be done by managing all public services to the ISO 9001 Quality Management System. Parts of the ISO 9001 system can be implemented across the entire public service immediately, to the benefit (and relief) of those who deliver and receive Government services – at no additional cost to Government.
One low hanging wastage fruit is to stop public workers from paying income taxes. Currently, the private sector must pay additional taxes, which are then given to public sector workers, who then give it to the Government. The accounting bureaucracy and costs required to manage the taxation of the estimated 25,000 public workers can be easily avoided.
Step 4 is to depoliticize the public service. In a Solutions Barbados administration, public workers will be selected and promoted on merit alone.
Any of these steps taken by themselves will not pull Barbados back from the brink, because frustrated public services can frustrate the entire process. Therefore, they must all be taken together. We need an increase in local and foreign currency revenues, and a better managed and depoliticized public service. The Minister of Finance is strongly advised to examine our plan before we run out of viable options. We continue to be available to discuss it.
millertheanunnaki May 8, 2017 at 2:01 PM #
Chuckle…..yup….Hemp and Cane two ideal rotation crops for ground provisions and each other.
Solar powered greenhouses for vegetables and bush crops of all climates as well as aqua-culture.
Scotland district for fruit trees with sheep tending the grass,not goats as they will bark and climb the trees.
With the right govt. who can dictate to the merchants and the local banks this country can move forward especially if brown envellopes can be put on hold for at least 2 terms……note no country in the world has eradicated corruption including China.
I used to tell my workers I know you are going to steal so just make sure you leave back enough for me…..One trusted worker who was responsible for an area was found out on his retirement to be keeping approx 80% of his sales……win some loose some.
@ Vincent
I agree that: “We have to stop thinking of Ag as a hot sun back breaking exercise.”
Much criticism is always leveled at UWI, but how many people know the St. Augustine Campus has a Faculty of Food & Agriculture and Department of Agricultural Economics & Extension that offer several courses in agricultural science.
@Artax
Will remove you from moderation shortly. Let us see how subsequent comments posted will behave.
@ David
No problem……… thanks.
Drib: You are a troll. If you are a paid troll, then keep the insults coming and go and collect your money. If you are not being paid, then you need to grow up. I have too little time, and cannot spend it on someone who does not want to discuss anything. Consider this my last response to you.
PLT: Thank you for your queries. I have all the time in the world for an honest discussion.
My response to your analysis, which includes the reference to the QEH and Criminal Justice costs was in this post: nextparty246 May 6, 2017 at 8:14 PM
Your response claiming that you understood was: peterlawrencethompson May 7, 2017 at 10:17 AM
A description of the Criminal justice initiative is in our Policy, section 3, and the health care initiative is in section 7.
Best regards,
Grenville
Artax May 8, 2017 at 4:19 PM #
Excellent point,it was used back in the 60s&70s it had a different name then,Hoad,Garvey and others went to it.
There is a faculty at Cave Hill as well and they just received 30 acres up by mangrove,yet we are hearing about the Hope in St.Lucy being turned into training centre headed by the Chinese.
Note the Chinese and Isrealis came to Bim in the 80s…one set in St.Philip at the Ag. station and the other ones built our only solar air conditioned office compound at Graeme Hall which on their departure our bright boys dismantled and installed electrical a/c.
We are making bare sport in this country as far as Ag. and the youth are concerned bearing in mind that the youth are our future….speaking from first hand knowledge.
@ nextparty246
Although the Dribbler and I may have our exchanges and differences of opinion, I believe your response to him re: “You are a troll. If you are a paid troll, then keep the insults coming and go and collect your money,” is unfair and immature.
As a political aspirant, you will be confronted by individuals, members and supporters of political parties who hold “tight party lines” and will be harsh in their criticisms of you, and even more so, especially if they perceive SB to be a threat to them losing base support.
Suppose SB held a political meeting and people in crowd hurled insults at you. Would you cuss them and end the meeting?
If you hold fast to that attitude, how long would you last as PM in parliament against the likes of Sincker, Inniss, Richard Sealy, Kellman, Lowe or Stuart who could be very insulting, or if you have to deal with Prime Ministers such as Ralph Gonsalves, Gaston Browne, Allen Chastenet and Dr. Keith Mitchell, all of whom are very arrogant and have terrible attitudes.
You need to remain focused.
@Artax at 5:20 PM …Well stated, That’s the joy of blogging, we can duel robustly as adversaries but also duel sensibly to dismiss egregious prattle from Mr Phillps.
I particularly liked your references to the other Type-A personalities like Gonzalez.
Grenville’s is like them all frankly but his petulance re my pointed questions is hilarious so I would disagree with you only to suggest that HIS type-A arrogant personality does not augur well that he will even get past the first election step far less ” … last as PM in parliament “!
Just recently I was talking to a friend of his and suggested to him that Grenville was moving along well with the announcement of players on his team.
This person knows him very well and when they ‘steeupsed’ loudly after my remark I was taken aback.
Now seeing his abject lack of desire to deal rationally with the political facts of his incomplete tax policy now helps me understand that reaction.
It also suggests to me that the man is not ready!
He is yet young so there is time.
@nextparty246
Your response of May 6, 2017 at 8:14 PM pointed out the obvious differences between taxing corporate profits and taxing corporate revenue.
However, it did not address my main analytical point: a corporate tax on gross revenue, collected at the till on each sale and remitted directly to the government as you have described, is functionally equivalent to a sales tax. Every single company is guaranteed to add it to their invoice or sales slip and the consumer will pay it. It is impossible to stop them from doing this. It is a consumption tax. This has the effect of leaving corporate profits entirely untaxed, giving corporate Barbados a $250 million/year gift that they did not even ask for. Why?
You have made reference to the QEH and Criminal Justice costs in that post as well as in your Policy, section 3 and 7. I have read these diligently, they mention fines in the Justice system, but not taxes. As i requested in my post of May 8, 2017 at 8:19 AM
“Please outline how these additional taxes would be collected. In the case of the “health taxes” to support the QEH for example, will it be a user fee collected upon entering the accident and emergency department or will it be a payroll deduction? Will you make it compulsory for all Bajans to carry health insurance to meet the cost of care? and if so will that be operated by a single insurance provider like the NIS or will there be an open marketplace for health insurance?
How will special purpose taxation work for the criminal justice system? Will the tax burden fall only on the accused, only on the convicted, or will there be a wider assessment.
How many other of these special tax levies will there be for “other government spending” and for what purposes?”
Trolls unite!! Hahaaaaa. Isn’t Grenville the same age as MAM?
” No chance
Comissiong says new fringe parties cannot win”
We have a political party in the UK called “The official monster raving loony party”. It only presents itself as an active political party during a British general election. They bring an element of satire, humour and tom-foolery to a depressing domestic political scene.
Grenvillle, you and your political party are in good company.
https://www.barbadostoday.bb/2017/05/08/no-chance/
https://www.barbadostoday.bb/2017/05/08/no-chance/
Commisong is not convinced the new political parties will be considered by the electorate.
“No chance
Comissiong says new fringe parties cannot win
Added by Colville Mounsey on May 8, 2017.
Saved under Local News, Politics
4
The new political parties that emerged recently have no foundation and no chance in the general election due next year, according to David Comissiong, the controversial political activist and leader of the People’s Empowerment Party (PEP).
In fact, Comissiong believes the new movements “should not even be considered as political parties” in the absence of a history of engagement, a philosophy or political agenda.
Any serious party, he said, would not spring up shortly before an election with little to show in terms of its history and guiding principles.
“I don’t consider those entities parties. I encourage anybody who wants to get involved in the public and political life to do so, so I welcome any involvement. But honestly, if you are going to designate yourself as a political party with any credibility then you can’t jump up within a few months of an election and say, ‘here we are’. You need to have been engaged in the society, in the important issues that confront the people; you need to have been showing that commitment over a period of time, you also need to have a philosophy, you need to have a policy agenda,” Comissiong told Barbados TODAY.”
Artax: It is neither unfair nor immature. Drib has trolled me for years. That is his job. I simply informed the uninformed reader who may wonder why I do not respond to his personal insults. The answer is simple, I don’t feed trolls.
If a heckler did a similar thing at a public meeting, then I would invite him to the stage and try to engage him in a discussion. I have done this and have gotten persons to discuss at least one issue rationally. For years, Drib has only insults to offer because he can hide on the Internet. That is where you need to direct your ‘unfair and immature’ comment.
PLT: I understand why you interpreted our tax on gross revenues as a sales tax. And I accept that some businesses may add the tax to their normal costs as you have described. However, those businesses will be less competitive than their competitors who choose to maintain their prices and pay the tax out of their profit as it is a corporate tax, and not a sales tax. Let us look at some numbers.
Company A has gross revenues of $100, and he pays a corporate tax of $10 out of $100.
Company B expects gross revenues of $100 and decides to add his corporate tax to his items resulting in gross revenues of $110. His tax then becomes $11, and his products become less competitive. Therefore, those who treat it as a sales tax will be punished by the market. Those who treat it as corporate tax will be rewarded by the market.
A health tax will be applied to all imported and locally manufactured high-sugar, high-salt and high-alcohol products. The tax will be determined based on the annual cost of treatment. For example, the quantum of tax for the high-sugar foods will be the annual cost to treat diabetes. Ditto for heart-disease, liver disease, and other NCDs.
For the criminal justice system, every offence will attract a fine based on ten times the value of the offence. Therefore, if someone steals a $700 cell phone, he pays a $7,000 fine. He will soon realise that it is cheaper for him to purchase his own things.
Best regards,
Grenville
@nextparty246
You are completely mistaken in hoping that Corporate Barbados is not going to pass 100% of this tax on to their customers. Let us look at your numbers under the current tax regime:
Company A makes sales of $100, and he pays VAT of $17.50 out of $100.
Company B makes sales of $100 and decides to add the VAT to his items resulting in a bill of $117.50 and his products become less competitive.
Are there ANY businesses like Company A in Barbados? NO! What makes you think that there will be if you change the name of the tax from VAT to Corporate Revenue?
Let us look at the numbers for the Health Tax. Total health care expenditure in 2012-13 was over $732 million and it has undoubtedly increased since. Of this amount the government tax revenue pays for 55%, while people pay about 39% out of pocket and the rest is covered by private insurance plans. This means that you propose to raise over $403 million in revenue by taxing specific foods, tobacco products, and other consumables known to be harmful to health. However Bajans simply do not consume enough of these products to raise that much money through taxing them no matter how high you put the tax rate, so your health tax will not work in its current form.
Let us look at the numbers for the criminal justice system. Digging through the budget I can identify over $200 million in government expenditure for this function. If you think you can raise that amount by fining petty criminals who steal cell phones then you are smoking something really good. (Here’s an idea, let’s legalize that stuff you’re smoking, tax the bejezus out of it and sell it to tourists and the local bourgeoisie. Then you might have a chance of funding the criminal justice system; Colorado made US$200 million from taxing weed last year.) No, your proposal to fund the criminal justice system out of fine revenue will not work.
Look at the numbers; do the arithmetic.
I am sure the accountants in this forum are looking closely at the proposals coming from Solutions Barbados, but the nonsense of ten times the value of assets stolen as the average fine is sociologically illiterate.
First, statutory fines will tie the hands of judges and magistrates, which may not be a bad things, but it denies them the right to make sentences based on the evidence presented in court – not just on innocence of guilt.
Second, it amplifies an element of class bias in the criminal justice system by focusing on low level economic crimes, and not on the big corporate villains, especially the armies of creative accountants.
And it ignores the wider sociology of crime: the low educational levels among offenders; the gender bias; the unfairness of sentencing by the bench, and in particular one magistrate; and a widespread reform of the judicial system.
If Solutions Barbados want s to be a new voice, it must get rid of speaking for a technocracy that is itself partly responsible for he mess the nation is in and speak with a new voice for the entire nation.
So far it has not done so – neither on its website or in public statements.
@nextparty246…you are hilarious! Now you say I have been trolling you for years. Is this since your PUBLIC post of your ‘Solutions’ when I asked a few pointed questions and said that they are excellent points for a term paper at school or college by not for meaningful and practical implementation at the national level. Is that my trolling sin?
So that your uninformed reader is fully up to date, I do not act like “a prick on the internet because [I] can.”
NOR am “typically unleashing one or more cynical or sarcastic remarks on an innocent by-stander, because it’s the internet and, hey, [I] can.”
That’s the Urban dictionary’s definition of trolling. I am a blogger with an opinion like all others. I offer them forcefully at times but ALWAYS respectfully.
Even in my anonymous persona here I act as if my name is attached – because frankly, it is. (Ask the Blogmaster some day when you see him on the streets, smile).
Your statements continue to lack the gravitas and research to advance their chances of success. For example you said above boldly but without gravitas of reality that:
“A health tax will be applied to all imported and locally manufactured high-sugar…For example, the quantum of tax for the high-sugar foods will be the annual cost to treat diabetes. Ditto for heart-disease, liver disease, and other NCDs.”
Where are the projections that show our imports on those items and the expected tax revenue that can sustain what you suggest?
Just last Sunday a respected UWI law dean noted that “… in one jurisdiction where such a prescription had been attempted in the design of a more healthful diet and reducing obesity, the court was prepared to rule it ultra vires…”
In short, such a tax will likely NOT be allowed based on court challenges. Yet you are informing ‘uninformed’ readers that I am trolling you because I ask you, HOW will you overcome the OBVIOUS legal, administrative, practical and Constitutional hurdles to your ‘Solutions’.
Hilarious, my friend!
I would suggest to you that if you had a troll like me in your ‘cabinet’ before you offered these grandiose Solutions then you would be able to stay focused on properly vetted proposals and not be so ‘prickly’!
Incidentally if a fellow steals a $700 phone where exactly do you forsee that he will get $7,000 to pay that fine? Will the state sell his house or car, garnish wages? And if he has none of them then what…and even if he did what another legal quagmire!
So are you projecting a whopping but NONCOLLECTABLE tax.
Grenville, please GET REAL! You are too bright to be offering these types of insanely impractical solutions. This is NOT an ethics class at church!
@nextparty246
Don’t get me wrong, Grenville, I think that it is a good idea to tax sugary drinks, tobacco, and other consumables that cause expensive adverse health outcomes. But this is not primarily to raise revenue, but to cut consumption. I think we should raise the tax on sugary drinks from 10% to at least 200%. Let us triple the price of a bottle of Coke. This might bring in $50 million or so at first, but I think that would rapidly decline as Coke consumption plummeted.
@ Grenville
Don’t feel special…
Dribbler trolls everyone.
He is like Mark Williams on Brass Tacks… just needs to have his voice projected on a regular basis. No clear message, no firm position on anything, no commitment to any clear philosophy … he just agrees with the obvious and then draws some lukewarm conclusion that is mostly designed to elicit continued meaningless discussion.
He is best ignored if you are seeking to get a clear message out…
PLT does not really understand the complexities of macro economic strategy, but unfortunately, he also does not understand that this is the case…
He may eventually get it…
Anyone who latches on to catch phrases such as ‘sales tax’ and jump to default conclusions that are grounded in the FAILED albino-centric philosophy, cannot be expected to grasp logic that is built on a completely NEW philosophical framework.
Darkness and light do not mix…
Unfortunately for you, the huge majority of BBBBBs are of the above ilk, so you are really like John the Baptist, preaching, as it were, in a wilderness.
LOL
Your head may end up on some shiite political platter too, but in the fullness of time, your message will come to be understood ….when the veil of darkness is lifted….
@Bush Tea
So why don’t you or Grenville enlighten me about “complexities of macro economic strategy” 😉 it would be less boring than innuendo about how I lack economic comprehension.
Honestly though, you can do much better than hiding behind a veil of imaginary complexity. I have been straightforward and factual… it’s fun… you should try it sometime.
“Sales tax” is not a catch phrase, it is a simple description of a mode of consumption tax. None of my conclusions are “default,” I worked them out logically in the full glare of BU criticism. If you look back you will recall that I started the thread defending Grenville’s proposal. It was only in the cut and thrust of debate that I discovered its defects.
My own perspective completely rejects “albino-centric philosophy,” but I’m not attempting to impose my own philosophy on anyone, just to objectively analyse Grenville’s platform within the economic system in which he proposes to implement it. If I were King of Barbados the entire economy would be organized as linked co-operative ventures all under community ownership, but that is for a different thread.
@ nextparty246 & Bush Tea
If you can produce factual evidence and arguments which prove me wrong I will be grateful to you and thank you for it wholeheartedly (even de Pedantic Dribbler). Unlike some others I like to be shown the errors of my ways… it’s called learning new things and is my second greatest joy in life.
peterlawrencethompson May 10, 2017 at 10:14 AM #
Could you give me your understanding of what is meant by the term that you completely reject…..“albino-centric philosophy,”?
Could you also give me its origins and who it is practised by.
Could you also state the reasons why you reject it.
@Vincent Haynes
“Albino-centric philosophy,” as I use Bush Tea’s term, is the white supremacist ideology that is baked into a Eurocentric world view. It includes such errors as: the view that European and North American cultures are “more advanced” than Asian of African ones, the blindness to the profound irrational racism of their philosophical tradition from its roots in Plato all the way down through Hume, Kant, Hegel, Marx and beyond, the blithe imposition of Christianity as the default moral code with no critical appraisal of its strengths and weaknesses, the promulgation of neo-liberal capitalism as the best way to organize community and national welfare simply because that pattern arose first in Europe, the mythology of the inevitability of the nation-state because that also had its genesis in Europe, as well as many other deeply historically embedded attitudes that disadvantage me because I happen to have brown skin.
Peter
Evidence abounds that the highly touted greek philosophers Plato,Archimedes,Socrates et al plagiarised the ideas of Egyptian society of thinkers whose skin colour was darker than yours.
This would suggest that what we find offensive was originally out Africa one of our ancestral homelands.
Have you ever studied the ancient societies of the African Empires that used to rule the world even the Olmecs that conquered sections of South America and settled there?
The northern tribes of europe have never created or invented anything all they have ever done was to streamline known actions/activities/religions/learning/etc,etc.
@Vincent Haynes
Of course Vincent. All of humanity came out of Africa. I’ve dabbled in histories of African civilizations and read Van Sertima about Olmec civilization.
Frankly I don’t give a damn where the truth originates, it can be European, African, Asian or extraterrestrial, so long as it is the truth. What I am rejecting is not mythologies or histories about origins; I am just interrogating received wisdom to see whether it is in alignment with verifiable fact.
Peter
My point is simply that what you are rejecting as ….white supremacist ideology… originated in Kemet or Timbuctoo.
I gather that your wish is to create a world where equality rules and all are taken care off……can you see it working?
Like I said Vincent, I don’t much care where white supremacist ideology has its roots, my objective is to weaken it in the here and now. My wish is continue to find joy in this brief span of existence, which I do by loving my fellow creatures and learning as much as I can.
Peter
In essence what you are suggesting is the ultimate destruction of what over time has become known as the capitalist system which is aided and abetted by the democratic system.
Any suggestions as to what we will replace it with…….any possibility that we could try it out in the Caribbean.
@ peterlawrencethompson May 10, 2017 at 10:58 AM
An absolutely brilliant definition of albino-centric philosophy….
But…
Boss, if macro economic strategy was ‘simple and straightforward’, then most of our world would not be embroiled in inexplicable economic chaos… Barbados maybe, but most other international economic managers DO understand decimals.
If YOU had a good understanding of ‘truth’ in this respect, then you would be a highly successful consultant ..with a trail of international macro-economic successes to your credit.
With regard to ‘enlightening’ you…
Bushie could also seek to explain the philosophy of human success, and the philosophical construct of macro and micro organisational performance assessment….
…but to what end…?
What would be the point of revealing exotic paintings to Ray Charles?
@Bush Tea
You are misquoting me. I never said that macroeconomic strategy was “simple and straightforward” I said that my arguments were “straightforward and factual.” That is an entirely different matter; I was trying to demonstrate with actual facts and numbers that economic managers DO NEED TO understand decimals.
You will also notice that I did NOT claim “good understanding of ‘truth’ in this respect.” I simply humbly asked for the opportunity to learn if you could demonstrate my errors with facts and numbers. I will always be open to that.
You needn’t be concerned about my “success.” I am lucky enough to work where and when I choose; and a large percentage of that work is pro bono.
@Vincent Haynes May 10, 2017 at 12:28 PM
I am suggesting that it is my hope that the neo-liberal/capitalist/democratic system will evolve into something better. We did manage some modest improvements on the colonial/capitalist/slavery system and I am inspired by my forefathers who helped achieve those steps. I don’t pretend to have either a crystal ball or the intellectual foresight to see clearly what comes next, but my sympathy is for collective forms of social organization that are as free of coercion as we can achieve. I think that when the weak are protected from the selfish we increase human happiness. I think that the love of money is the root of a whole lot of evil. I think that power corrupts. etc. But of course none of these insights are my own, so I am a dedicated fan of learning from others.
@ Bush Tea said “An absolutely brilliant definition of albino-centric philosophy….”
I am thankful that I did not misinterpret your concept
peterlawrencethompson May 10, 2017 at 1:02 PM #
I share your hopes and aspirations for our global society unfortunately human nature is such that they are forever just outside our grasp.
In the 50s&60s we were close then it escaped to what is presently the largest divide since the middle ages between the haves and the have nots.
Hope springs eternal……..we can but try.
I see our Guyana-born DPP will be defending the US government in an extradition case. No we know who he is really working for.
Solutions Barbados must put forward a policy proposal on the extradition of Barbadians for alleged criminal offences.
We could either go cap in hand to the US and other such governments, and extradite our own citizens, or do what the Israelis and Germany do: do not extradite your citizens. However, if other jurisdictions have a case against a Barbadian citizen, and the alleged offence is one in Barbados, then they are free to present the evidence in a Barbados court.
Advanced nations do not extradite their own citizens to foreign jurisdictions, as we know so well in Barbados. Some years ago, under the Arthur government, we tried to extradite a Germany who had run a hotel in Barbados, from the UK. First, officers in the case wanted to know why we wanted to extradite him for Bds$15000 (£5000).
Then the suspect defected back to Germany, marred a UK Jamaican, Maureen, where he has been ever since.
PLT: Your scenarios seem confusing. If your Company A makes VAT inclusive sales of $100, and your Company B makes VAT exclusive sales of $100, then why are you comparing them? Let us look at it again.
Company A makes gross revenues of $100. He then calculates the corporate tax at 10% which is $10, which he pays. That is how I and any successful businessperson will conduct his business.
Company B sells the same volume of products as Company A. However, since he is convinced that the 10% amount is a sales tax, then all of his products cost 10% higher than Company A’s, and he will never know that the only reason why he went out of business is that he was misled into thinking that the Corporate tax was a sales tax.
On Health, people are guessing about the sweet-drinks tax. One thinks that it should go up by 20 times, another thinks it should be 50 times. We say, calculates the health care costs for addressing diabetes, and we will know the actual number. Once the NCD’s are removed, then we will be left with accidents, emergencies, babies, and the elderly. But we know that the NCD’s are a significant chunk.
On the Criminal justice system. We explained that we will empty Dodds of all non-violent offenders; therefore, instead of managing 1,000 inmates, it may be a tenth of that. Further, the fines are not going to pay for the entire system (including the police), only the court and imprisonment system. It is not as daunting as you think.
Hal: A check of the court fines revealed that the fines are around 10 times the value of the offence. Are you claiming that they are doing nonsense?
Best regards,
Grenville
In short, Grenville. We need an overhaul of sentencing policy. Justice must be at the heart of it. Only recently a 19 yr old was remanded in Dodds for a month for stealing a mobile phone; on his next appearance he was fined Bds$3000 and ordered to compensate the victim.
Was that fair?
There at e many similar sentences, and most are by a single magistrate. Some of us may remember the Guyanese magistrate |Lennox Perry who abused the system in much the same way.
Criminal justice needs a complete overhaul, not tinkering.
A couple of years ago my lawyer was at oistins on a friday and the cutest kid you ever saw his wife said stole his phone when his back was turned. He was lost without it , missed some important calls it doesnt seem like a big deal but it could cost lots in tourist dollars. So what I am saying is if it was a tourist that is robbed he should be fined if it was a local that was robbed the culprit should be forced to use the washrooms at oistins.
Lawson,
You mean toilets…not washrooms (joke). But I agree.
@nextparty246
Sorry to confuse you Grenville. I said sales, not “VAT exclusive sales.” The VAT is rolled into the price of the item in Barbados just as your proposed corporate revenue tax will be. so:
“Company A makes sales of $100, and he pays VAT of $17.50 out of $100.
Company B makes sales of $100 and decides to add the VAT to his items resulting in a bill of $117.50 and his products become less competitive.”
There are NO businesses like Company A in Barbados. There will be if you change the name of the tax from VAT to Corporate Revenue. It is still a tax on the value of that sale which is wrapped into the sale price.
I pointed out before that Massy groceries currently has a profit margin of 4.5% before taxes. Do you really think that they will simply give you 10% of sales to convert that profit into a 5.5% loss?? No they will not! They will raise prices by about 10%, pay you your tax, and retain their current profit margin. the entire tax will be paid at the till by shoppers in the increased cost of their groceries. There is no way around this Grenville. When you respond please deal with Massy as a case in point so we can discuss how this works in the real, not theoretical, world.
How do you expect Massy to respond when you tell them to send the government 10% of each and every sale they make?
@nextparty246
Thanks for the further info about your policy for the criminal justice system. I agree that reducing incarceration rates is a good idea… I have no data on how dramatically that would reduce the prison population… we need data rather than guesswork.
If the fines cover the costs of “only the court and imprisonment system” then you only need to raise about $100 million. Do you believe that the people being convicted and fined have the financial capacity to pay $100 million annually?
@PLT
you are correct IMO. You can call it whatever you want, it is a flow through tax based upon consumption.
There is no perfect system.
What I am surprised you have omitted, given your preferences, is a “wealth tax”. Capital which is being employed is one thing, but sitting on large amounts is another.
The challenge, with any system, is Bajans can (and have) gone ‘offshore’. While we welcome those foreigners who choose to set up and pay taxes here, they are only avoiding tax in their home country, and trading it for a lower rate here. Bajans can set up elsewhere, and do likewise. Hence we do not even have to lose a local business to a foreign buyer to lose the tax revenue. GP is attempting to plug this hole, even though I can see “ways around it”.
SB’s plan is far from ideal IMO, yet change is required. It is unlikely to come from the entrenched parties, so by default, he will get my vote. My fear is they will not appeal to the basic voter, who thrives on a lot of sweet (sh!!te) talk, free food and drink, and the odd trinket. Hence, why they are currently being dismissed, even given the current global appetite for change, to actually get enough support to form a government.
Yet as we saw in one of your old homes (I think, memory isn’t the best these days) last night, if the B & D’s are close and he gets 4 seats, he wields a big stick. They have to go through him to get anything done. Bim has never has a minority government, and that is likely the best one can hope for.
@nextparty246
I owe you an apology Grenville. After a chat with a medical Dr. I think that I radically underestimated the amount that Bajans spend on sugary soft drinks. Sorry. This means I must reappraise the revenue generating potential of taxing them.
Bajans spend $100 million a year giving themselves diabetes and obesity with soft drinks. This means that a 100% tax would raise $50 million if it cut consumption in half. Don’t know what we spend treating diabetes, but $50 million is a non trivial contribution to the task. If, however, consumption plummeted by 90%, the tax would only raise $10 million but the cost of treating existing diabetes would still be as high as it is now for several years.
Such a tax will drive people to substitute diet drinks sweetened with aspartame or sucaryl or some other chemical invention. I very strongly suspect that in the long term these are no better for us from a health perspective than sugar, perhaps worse. https://www.cancer.org/cancer/cancer-causes/aspartame.html
One of the deadliest NCDs is of course Cancer. I assume we tax tobacco heavily, but there are a myriad of environmental as well as dietary contributors to cancer. For example, the particulate matter in the clouds of smoke emanating from diesel powered buses, trucks and other vehicles. Do you propose a health tax on diesel fuel? What else?
@NorthernObserver
I agree that there is no perfect system, but I’m not trying to say what I would prefer… what I would prefer is irrelevant since I do not aspire to political office. I am attempting instead to spur improvement of what Grenville is proposing because they might indeed hold the balance of power in the house even if they win 2 seats.
Yes, it’s frustrating that the voters in British Columbia (with only 57% turnout) failed to vote more decisively for change.
@peterlawrencethompson at 10:14 AM and other posts… You and @Vincent hit some high notes today.
First, you were a brazenly frank man to note that “I worked them out logically in the full glare of BU criticism….it was only in the cut and thrust of debate that I discovered its defects.”
We can all only keep hope alive that the political personas here and on the national scene will grow such cajones that when on discovery of a defect in their position they develop/modify their narrative to reach a stronger position.
Mr Phillip’s has for whatever reason not adopted that hopeful stance.
I also wish you well with the evocation to the Bushman that ” I have been straightforward and factual… it’s fun… you should try it sometime.” I invited him to a similar meeting ‘of the minds’ recently but he completely disavowed any such … LOL.
And most definitely I would be an overjoyed voter if nextparty246 “… can produce factual evidence and arguments which prove [you] wrong…” because then we would be able to open another significant round of debate using your time honored honest debating stance as the platform…so let’s keep hope Alive!
But most profound was your analysis on the neologism albino-centric jargon from the Bushman.
I have been at a complete lost over the years of reading the Bushman on how exactly one could realistically and honestly divorce the behaviours of all races so summarily to reach his jargon.
The comments from both you and Vincent affirmed with my view but it makes no sense debating this with the Bushman because he too is a Type-A personality and I have never met one yet who actually debates issues as you noted ought to be the method of debate.
Good God! We are miles behind other countries in how we conduct our politics in Barbados. David Comissiong withering dismissal of Solutions Barbados was appropriate.
Grenville, setting up a political party is not a “fly-by-night” operation. What do you hope to achieve in the forthcoming general election?
Sir, you do not come with a pedigree. The video link below highlights how our political landscape has never matured beyond the superficial and the mundane.
http://www.aljazeera.com/indepth/opinion/2017/05/julius-malema-inherit-jacob-zuma-south-africa-170504105419665.html
I see our Guyana-born DPP will be defending the US government in an extradition case. No we know who he is really working for.
Come on, Hal. This is the usual practice with all extradition hearings in all regional jurisdictions! You are straining at a gnat!
Jeff
I thought it strange when I saw a similar situation recently in Antigua.Is this a reciprocal arrangement?
Hal
I am told that the first person through the door at receptions at the ambassador’s is Chief Justice Gibson and the second is DPP Leacock.
“closed early today as a result of air conditioning challenges, which resulted in serious discomfort for the staff and public.”
http://www.nationnews.com/nationnews/news/96672/government-agencies-warrens-closed#sthash.Hjwu0Xvi.dpuf
Too bad they didn’t implement ISO 9001
I suppose it’s difficult for Pornville Inniss to keep his trap shut.Obviously he has never heard its better to remain silent and thought a fool than to open your mouth and confirm it.
His reference to Comissiong and the turmoil in Venezuela was given some exposure in today’s Nation newspaper by Tennyson Joseph and I agree with Joseph’s comments entirely.I also restate that Barrow made a serious mistake when he funded education at all secondary schools in Barbados.People like Inniss disgraces Kolij.Casting pearl before swine.Some paul-tishun.More like a fisherman from Skeete Bay.
http://www.nationnews.com/nationnews/news/96630/ah-amateur-donville
Jeff
I thought it strange when I saw a similar situation recently in Antigua.Is this a reciprocal arrangement?
@ Gabriel, the requested state will normally assist the requesting state by “prosecuting” the hearing. It is part of the treaty.
From the US extradition treaty with Germany-
“Articles 14-30 outline the procedures by which extradition shall be accomplished. Article 30 provides that expenses arising from the transportation of the person sought will be borne by the requesting state. This article also provides that the requested state shall provide for representation of the interests of the requesting state before the competent authorities of the requested state. This requirement has been included in recent extradition treaties the United States has negotiated because the costs of presentation are a hinderance to the making of extradition requests. This article differs from 18 U.S.C. 3195, which otherwise requires that all costs or expenses incurred in extradition proceedings be paid by the requesting authority.”
Hi PLT: Once the tax is a sales tax, then it must be added to a customer’s bill. Therefore, your Company A is a myth, as you have realized.
If it is a corporate tax, then those who treat it as a sales tax will be uncompetitive. Those who treat it as a corporate tax will have more competitive products, and therefore, higher sales. Let us let the market decide on this.
If Massy treats the tax as a sales tax, then they will start to lose market share – unless people are willing to pay extra for location convenience.
@nextparty246
Company A, the one that does not pass the tax on to consumers “is a myth” as you correctly point out. After you implement your 10% tax on their sales revenue Company A, one that does not pass this tax on to consumers, will continue to be a “myth.” Changing the name of the tax does NOT change how companies respond to it. They don’t give a damn what you call the tax, if there is a business logic to having the customer pay the tax then the customer will pay the tax.
Grenville, the question I asked was: Do you really think that Massy will simply give you 10% of sales and thereby convert their 4.5% profit into a 5.5% loss? Massy has the highest profit margin of any of their competitors in the grocery sector in Barbados. Most of the others have between a 2% and 3% profit margin in a good year. The entire sector will respond to you with one voice… there is no competitor, not a single one, who will fail to pass this tax on to consumers.
They will get together in their expensively renovated plantation houses playing gentleman farmer and raise a glass to you for no longer taxing their corporate profits. You are deluding yourself if you think that the corporate class has anything above their self interest at heart. After decades in business I’m sure you know this.
“The entire sector…..will get together in their expensively renovated plantation houses”
Massy is a T&T firm, Trimart/Channel is Ansa also T&T, don’t know who owns Jordan’s these days (the founder lived in a reg wall house in St.Peter), and I wasn’t aware the owners of Carlton A-1 or Emerald City lived in renovated plantation homes, though they might.
@NorthernObserver May 10, 2017 at 5:06 PM “the basic voter, who thrives on a lot of sweet (sh!!te) talk, free food and drink, and the odd trinket.”
I keep hearing that the basic voter receives gifts from politicians, gifts such as free food and drink, and the odd trinket, yet I am an average voter and I have never received any of these things and i don’t know anybody else who has either.
Now I remember just once in almost 50 years a politician saw me at the bus stop and went (a teeny, tiny bit) out of his way to give me a lift home.
That did not influence my vote one way or another.
Dear PLT:
I think that we have discussed this sufficiently to converge towards the point where we can make concluding statements.
Economics is essentially about predicting human purchasing decisions. There is always a measure of uncertainty in our predictions, and our plans reflect that. Therefore, when making conclusive statements, we should give the measure of uncertainty.
Where the market is accustomed to the price of a product, and the profit margin is over 25%, and there is no collusion in the market, then the company is more likely to treat the tax as a corporate tax rather than a sales tax. The lower the profit margin, the more likely the company is to treat it as a sales tax. A simple example may suffice.
There are several coconut vendors that operate close to each other in Warrens. They sell coconuts at $2.00 each. With 500 coconut sales per day and a conservative 20 working days per month, this results in gross monthly revenues of $20,000 and a profit margin in excess of 50%.
If all of the coconut vendors are taking home around $12,000 tax free, and we tell them that they must all pay $2,000 corporate tax per month, then they have a choice. They can either add it as a sales tax and sell each coconut for $2.10, or they can pay the corporate tax out of their $12,000 profit and accept $10,000 after-tax profit per month. What do you think that they will do?
The vendor that sells coconuts for $2.20 in a competitive environment will be punished by the market, and is unlikely to get any sales that day. Is that a reasonable scenario? Will you purchase a coconut for $2.20 when the neighbouring vendor is selling it for $2.00? Or will you purchase a bottle for $13.20 when everyone else maintains the $12.00 price?
If Massy’s mark-up on sardines is 45%, then they will likely treat the corporate tax as a corporate tax. However, if the mark-up is only 5%, then they will likely treat it as a sales tax. Can we agree on this?
I look forward to your concluding statements, and thank you for the discussion. There is no need for adults to insult each-other when discussing any topic.
Best regards,
Grenville
@PLT May 12, at 12:27 AM …I continue to be impressed by your excellent discourse on this subject.
Unfortunately it appears that whereas you practically advise that the grocery retail industry will NOT incur a 10% tax to their bottom-line thereby LOSING money on every sale, that nextparty246 has determined impractically that the ‘competitive’ companies will absolutely incur those costs…. and then eventually and obviously go out of business.
Clearly there are connection issues getting a clear signal through to the 246 area code!
Apparently nextparty246’s bad connection has ‘mythified’ an awareness of the real retail market conditions which you so accurately describe…the conditions which would lead to that ‘one voice’ that no business pays a tax which automatically removes its ENTIRE profit reason for being in business.
And the overarching pain point as you have shown, over and over, is that the incidence of any new tax in the grocery retail trades will most definitely be borne DIRECTLY by citizens…those who apparently the action is intended to help.
In turn it will have limited if any effect whatever on the corporate chieftains.
As you know, when you are enjoying 25% to 50% gross margins in some professional service industries this argument of taking a 10% hit comes in a much different flavor….as it can be ‘absorbed’ by the corporation….until they find a way to pass it back to their clients….But that type of % tax in retail could never be absorbed. It’s just NOT possible!
NorthernObserver May 12, 2017 at 1:48 AM #
“…………..Trimart/Channel is Ansa also T&T…”
@ NorthernObserver
Perhaps you may want to CHECK your information again.
Channell Supermarkets are owned by BARBADIAN entrepreneur, MR. RONALD “TONY” CATLYN.
In September 2016, Mr. Catlyn REACHED and FINALIZED an AGREEMENT with ANSA McAL (Barbados) Ltd. to PURCHASE the Trimart Supermarket chain as a going concern.
@nextparty246
Dear Grenville, At last we begin to see eye to eye. You admit that “However, if [Massy’s] mark-up is only 5%, then they will likely treat it as a sales tax.” Well we know for a fact that Massy’s profit margin is less that 5%, and we know that this is so for ALL their competitors, so we agree that in this sector every company that you impose a 10% corporate revenue tax on “will likely treat it as a sales tax.”
So what about other sectors? I am delighted if the coconut are earning $12k/month in revenue, but we need a more systemic way of figuring out what the effect of your corporate revenue tax proposal will be across the economy. We need to determine what the average profit margins are in various sectors so that we can tell who will treat is as a corporate tax and who will treat it as a sales tax. I do not have Bajan cross sectoral data, but you can take a look at http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html to see what profit margins are like in the US. Bajan firms are not outperforming their US counterparts, so now you are in a position to see that across the dominant sectors of our local economy you have admitted that a significant majority of Bajan corporations “will likely treat it as a sales tax.”
@NorthernObserver May 12, 2017 at 1:48 AM
You are correct of course. I’ve been away for a long time and have not yet quite adjusted to the fact that Massy is more than just BS&T in sheep’s clothing.
Thanks for the update Artax. As you can see, it takes even Trinis a while to make their websites current
http://ansamcal.com/sector/retail/trimart-inc/
@SS “yet I am an average voter and I have never received any of these things and i don’t know anybody else who has either.”
You need to get out more. Go down to party HQ, or one of the formal gatherings. To get on the “Hamper list” you likely need to be a political operative. They don’t just knock on your door.
@GP
if you think you are getting any amount of tax from the variety of cash businesses in operation, I would suggest you think again. Most of the operators don’t even know, or even keep a record. How many chairs rented today and for how much? How many meals were sold from a vending truck? or other places. How many fish or yams? Have you ever seen a jet ski operator keeping track of each customer and how much they paid? They don’t keep books. Or not officially.
And if you target them, you will be tagged with “targeting the small business person who can’t even mek enuff to pay child support”. You can encourage a book keeping system, even link the submission of accounts to being granted a license, but that will be an uphill battle.
Sometimes an operational license fee is the best you can get….and collect.
PLT: Please do not conclude outside of the limits that I stated.
You are basing your entire argument on a majority of businesses having low profit margins of around 5%. I think that there are many companies that have profits over 20%. You have ignored the coconut vendor, since it does not support your argument, well what about Contractors. While we are at it, what about: doctors, lawyers, engineers architects, accountants, and the other 30 professional and non-professional service provider categories.
Best regards,
Grenville
NorthernObserver May 12, 2017 at 11:34 AM #
Thanks for the update Artax. As you can see, it takes even Trinis a while to make their websites current.
@ NorthernObserver
No problem.
And speaking under correction, from what I observed a few weeks ago, it seems as though a Trimart, Channell Supermarket or an associated business will be opened in the former Plantrac building in Eagle Hall.
You are correct, many small to medium sized businesses owners do not keep accounting records. They are of the opinion that doing such is a waste of time or an expensive undertaking, and even more so if they believe filing income tax returns would mean having to pay income taxes.
I also made the suggestion that, in order to capture all income earners in the “tax net,” similarly to how the owners of public service vehicles must file tax returns to obtain a tax clearance certificate before they can pay road taxes, business owners should be required to file tax returns and apply for tax clearances before operational licenses or permits are issued. However, as you correctly stated: “that will be an uphill battle.”
@ nextparty246
Making comparisons, for example, between coconut vendors and businesses such as Massy may not be enough to justify your argument, since the markets between the two are different.
Coconut vendors operate in a competitive market, whereby numerous vendors, selling the same product, compete with each other to satisfy an equally numerous amount of consumers. Under these conditions, vendors cannot dictate market conditions. Hence, you are correct to mention that a vendor cannot raise the price of his coconuts from $2.00 to $2.10 because consumers will purchase from vendors whose prices remain at $2.00.
On the other hand, firms such as Massy or ANSA McAL, which own a number of firms (producing similar products), wholesale and retail outlets, operate in a market characterized by monopolistic competition.
ANSA McAL has the ability to control prices, since they can produce their products in Trinidad and import them into Barbados at low marginal costs, thereby pricing competitors out of the market.
For example, Carib Beer is brewed by Carib Brewery in Trinidad and distributed by Bryden Stokes Limited in Barbados. Both companies are owned by ANSA. What is there to prevent ANSA from passing on the 10% to retailers or restricting supply to charge consumers 10% more?
@ Artax
What is there to prevent ANSA from passing on the 10% to retailers or restricting supply to charge consumers 10% more?
++++++++++++++++++++++++++++++
Why do you think that this is NOT exactly what they do NOW…?
@ PLT
Well we know for a fact that Massy’s profit margin is less that 5%, and we know that this is so for ALL their competitors,
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++
…and you know this how?
Presumably you also know of the multiple methodologies that can be used to cream off profits under the guise of expenses such as ‘management fees’, consultant services, Head office expenses, and just plain ‘transfers’….?
Our sugar plantations have been making serious losses for forty years now….
Are they all bankrupt?
Sometime the simple-mindedness of your prescriptions are underwhelming….
@nextparty246
I cited the research to show what the profit margins in various sections of the US economy are. I can also show you research which shows comparable profit margins in Canada, the UK and some other EU countries. If you have research which shows that in Barbados profit margins are significantly different from the rest of the world I will stand corrected.
I am not ignore your coconut vendor example, just pointing out that these figures are anecdotal and in any case do not compare in magnitude to those of the large corporations that dominate the Bajan economy. When you are making policy you need to pay attention to the firms that dominate the economic landscape, not the marginal ones at the edge of it.
You said “I think that there are many companies that have profits over 20%.” You are correct, but you need to look more closely and see what percentage of the economy they make up. It isn’t the number of these companies that matters in this discussion, it’s how much of the Bajan economy do they comprise. Massy’s revenues in Barbados & Eastern Caribbean were over a billion dollars last year. Companies like Massy are the ones that overwhelmingly dominate the Bajan economy.
@Bush Tea asked “…and you know this how?”
A combination of looking at the published financial records of those that are public companies and analyzing reliable sectoral data to get an estimate of the others.
Yes I do “also know of the multiple methodologies that can be used to cream off profits under the guise of expenses such as ‘management fees’, consultant services, Head office expenses, and just plain ‘transfers’….?”
Yup, that’s most of what they taught me in doing an MBA 😉
You point out that “Our sugar plantations have been making serious losses for forty years now…. Are they all bankrupt?”
Nope, not all, but several are teetering. Furthermore as I’m sure you know a huge amount of plantation land is fallow, owned by entities like CLICO which did go bankrupt. Then of course there are COW’s huge landholdings which are subsidized and kept out of bankruptcy by his exceptionally profitable other enterprises subsidized by my tax money and yours. Some of the remaining sugar plantations that have not gone bankrupt yet are probably surviving of selling of parcels for building purposes.
“Sometime the simple-mindedness of your prescriptions are underwhelming….”
That’s fascinating… because I’ve made no prescriptions at all. I have confined myself entirely to objective analysis of Grenville’s prescriptions without proposing any of my own. If you find them simple-minded it is likely because they do not exist in this forum at all.
Sugar cannot sustain a Sugar Plantation…..the growing of sugar cane presently is not profitable or sustainable in this incarnation,the operation is subsidised with other areas of operation or by the bank.
In between 1900 and now the cane industry went bellyup many times with plantations being sold for a dollar plus debt…….the late 70s saw one such time when many individuals who started life poor bought them some local and some after returning from Canada&UK.
PLT: Those profit margins on which you are basing your analysis are fake. They are determined for one reason only, to pay low taxes on net profit.
Actual profit is normally significantly higher, as is mark-up. You can simply talk to retailers. Mark ups are normally around 30% for many Barbadian products. As far as manufactured products, it is normally recommended to mark up around 400% to be assured of a reasonable profit on low volume sales. Mark-ups can be reduced once the sales take off.
As previously explained, companies are forced to be very inefficient in order to reduce net profits so that they can reduce the corporate taxes payable. The additional cost of the inefficiencies are currently passed on to consumers. To remove this incentive for inefficiency, we plan to apply the corporate tax to gross revenues. With this method, companies will no longer be forced to be inefficient. Regardless of how they pay the tax, it will be much better than the current method.
Best regards,
Grenville
@ Grenville
“Those profit margins on which you are basing your analysis are fake. They are determined for one reason only, to pay low taxes on net profit.”
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
You do not REALLY expect PLT to internalise that level of analysis …do you?
There is a simple reason why some of us are poor…. it is best summed up as gullibility…. which is the only term Bushie can think of to explain ANYONE who thinks that “Massy’s profit margin is less that 5%”.
LOL
Anytime we have a system where taxes are based on ‘profits’, it should be patently OBVIOUS that and ‘profits’ declared will be nominal at best….
Why would a Canadian (or Tricki) owned company that realised ACTUAL profits of 40%, pay taxes of 35% on those profits? …. when they can EASILY charge themselves a variety of ‘expenses’ for management fees, head office transfers, expert consultants, or play around with depreciation etc that reduces the ‘profits’ (and taxes payable) to token amounts?
…and more importantly, who in their right minds would persist with such a tax system …and expect any other result, but that the 1% gets richer while the 99% brasses continue in gullible poverty?
A simple tax on business VOLUME (call it what ever tickles your fancy) is much more difficult to manipulate…., is much easier to administer, and much more predictable.
Far better to charge 10% (or even less) on ACTUAL sales …than 35% on ‘so-called-profits – which can be manipulated, ‘willy-nilly’, down to nothing?
@NorthernObserver May 12, 2017 at 11:41 AM “You need to get out more. Go down to party HQ, or one of the formal gatherings. To get on the “Hamper list” you likely need to be a political operative. They don’t just knock on your door.”
Thanks will heed this good advice.
Because let me tell you these lads and lassies have been knocking on my door for more that 50 years and they ALWAYS, ALWAYS COME WITH EMPTY HANDS. Both parties. Same thing.
@Bush Tea 2017 at 9:07 PM …Why do you persist with this level of disingenuous?
The remarks issued by @PLT on gross profit margins are well established principles based on the REAL business in the industry.
It is cute and progressive sounding to call the analysis fake because we all know that corporations do front load their financials with expenses and ‘create’ profit margins that are ‘low’,
But this happens across the ENTIRE industry so regardless of your and Greville’s fake claims and supposedly superior analysis the fact remains that neither of you would be able to stop any of the retail companies from passing the tax to the consumer.
Any retailer understands the MARKUP (MU) and GROSS PROFIT MARGIN (GPM) are NOT the same. Good heavens any competent business student knows that.
How can you rightly excoriate a minister of finance for misusing decimal points and support similarly unconscionable lack of knowledge on these very important and different measurements.
A MU is a % to sale price of sales – wholesale cost. A GPM is the % of the sale price of the wholesale cost.
One is a unit calculation and indeed may be high. The other is basically across all company costs and reflects the revenue earned that goes towards ALL operational costs. And in the retail trade it is historically low.
Why is this REAL matter being discussed as some esoteric management moot point!!!
@nextparty246
Hi Grenville,
The figures that I base my analysis on are calculated according to GAAP (generally accepted accounting principles) and audited every year by the world’s most prestigious auditors like your Dad’s old firm. I don’t know where you got your figures because you won’t cite your sources. You can call the figures I quoted fake if you like, but until you present me with actual evidence I have no basis on which to correct my errors 😉
As DpD points out, when you tax corporate revenue it has NOTHING to do with the merchant’s markup, so I won’t belabor the point.
I’ve been a businessman for well over 30 years; I’ve run multi-million dollar organizations that had to be audited each year. No company is “forced to be very inefficient.” Some choose to be corrupt; some choose to manipulate rules to gain an advantage in the marketplace. Deducting expenses that really are not business related is the oldest game in the book, but is trivially easy for an auditor to uncover.
You are correct that a “simple tax on business VOLUME (call it what ever tickles your fancy) is much more difficult to manipulate…., is much easier to administer, and much more predictable.” This is what attracted me to your idea when I first read this thread. However, you simply need to accept that for all it’s good points it is in effect a sales tax and it is Bajan consumers who will end up paying it. Once you have worked that out you can then decide if that is what you intend. If so that’s fine, just don’t delude yourself that you are taxing corporations with this tax.
I am not trying to defend capitalism, I think it’s a corrupt economic system, but it is the system in which you propose to implement your tax proposals so you do have to take into account how it works in the real world, GAAP and all.
Yours is a rambling and incoherent response Dribbles… and cold ..not even lukewarm…
Saying that Grenville is right about the falsely ‘front-loaded’- expenses admits his ‘fakeness’ claim…. and the fact that the practice is ‘industry wide’ only confirms that it is a SYSTEMIC issue to be resolved by the kind of thinking being pushed by Solutions Barbados.
The rest of your post is, quite frankly, a lotta shiite ….. about completely irrelevant “MUs and GPMs” and their definitions….
Don’t you get it yet….?
The GPMs are historically low because they can be manipulated to be so …. in order to avoid paying legitimate due taxes.
Finally, who ever said that the objective was to avoid having legitimate costs passed on to consumers? ..why should these costs be absorbed by taxpayers in the form of avoided corporate taxes?
Look…
Leave the technical answers to PLT…..
@Bush Tea said “A simple tax on business VOLUME (call it what ever tickles your fancy) is much more difficult to manipulate…., is much easier to administer, and much more predictable.
Far better to charge 10% (or even less) on ACTUAL sales …than 35% on ‘so-called-profits – which can be manipulated, ‘willy-nilly’, down to nothing?”
I’m delighted to see that you have understood at least some of what I’ve been saying: that a 10% tax on sales is a 10% sales tax, it doesn’t matter what name you call it. If that is what you intend to impose that’s fine, just don’t delude yourself that it is a corporate tax.
I agree about its predictability and ease of administration, I even allowed that it could be much more effective at raising revenue than VAT because Grenville said there’d be no exemptions, or sweet deals for the hotels, and nothing would be zero rated.
About manipulating so called profits down to nothing, here is how it is done. Yes you concoct “a variety of ‘expenses’ for management fees, head office transfers, expert consultants,” intellectual property licensing contracts, special re-seller arrangements, etc. But these are all also subject to exactly the same taxes you are trying to avoid, unless you situate them in a different jurisdiction, than where your customers are, that has much lower tax rates. So if you’re a Canadian or US or European company you hunt around for a jurisdiction like, I don’t know… Barbados perhaps. Where the oh so accommodating locals will bend over both backwards and forwards to help your company legally avoid its tax obligations in return for a pittance of between 0.25% and 2.5% (or even 0% if you are an exempt insurance company).
Massy’s audited financial statement makes it clear that they did not use these tactics in the 2016 fiscal year. 4.5% was the best they could do as a profit margin, and at this rate they comfortably outperformed giants like Tesco in the developed world.
I should have phrased the above “Where the oh so accommodating locals will bend over both backwards and forwards to help your company screw your hometown taxpayers in return for a pittance of between 0.25% and 2.5% (or even 0% if you are an exempt insurance company).”
Mr. Phillips, in you next column please write under the topic “Do our teachers love our children”.
And, yes, they seemingly did not do enough for me.
@PLT
the key is after paying minimal tax offshore, the resulting profits can then be repatriated via dividends ‘tax free’.
I was once told the warranty programmes offered by many retailers (captive insurers) was their most profitable business unit. And another reason why margins, however you wish to describe them, become less relevant as the real money is being made selling warranties. Selling the product becomes a gateway to selling warranties.
Dear PLT:
Well, you just had to follow Pach into the dark side. You just had to cross the line, my line. Once you mention my family, I have no choice and no discretion in this matter – I have to end this conversation – no exceptions – it is an unbreakable promise.
However, before I go, let me explain that despite your experience, if you have never been a principal director of a large company, you have absolutely no idea. You should listen to BushTea, for he writes as if he has been behind the veil.
We are on the brink of economic ruin. We have designed a 4-step plan that is designed to pull the economy back from the brink without the predicted austerity, without sending home public servants or reducing their salaries, and without having to beg other nations for money. You have chosen to turn it into an academic exercise of whether some businesses will treat it as a sales tax or corporate tax. To justify a sales tax, you somehow think that the actual profits of large companies is in the region of 5% – when I have repeatedly told you is only declared in order to pay low taxes.
If you do not wish to learn, then fine, you win. Keep reciting your orthodoxy to your acolytes as we all go over the proverbial cliff. ‘Profits are exactly as worked out in accordance with the religion of GAAP. Actual profits are in the region of 5%. All companies will treat the 10% corporate tax like a sales tax and add it to their invoices; therefore, reject SB’s ideas – we are all better off taxing companies that way that we are currently taxing them.” Welcome to your nightmare.
Best regards,
Grenville
…..and there endeth the lessons in Solutions way forward whose leader obviously has no real interest in politics or leading the country anywhere,who after being discomfited for the last couple of days on his economic model,has taken up his ball and bat over a bogus infringement by an opposing player.
We will watch how the other not out batsman without ball,stumps or bat will continue playing.
Sad to say,but I told you so.
@Vincent, LOLL.
But wait, if you see an approaching storm as does all others with ‘eyes wide open’ how yah cud claim title to ‘I told you so’. LOLL.
But that being said I should also recall that the blogmaster calls folks like you or any other rational storm caller ‘armchair critics’ so all good!
If this Bajan political scene was not so absolutely problematic we would not be trying to create political saviours where there are none.
nextparty246 have created a Sunday school class paradigm and we have been sucked into it because frankly we all seem to seek some sort of moral comeuppance or some such.
His response above about family is so utterly ridiculous for a politician that it actually does not deserve further commentary ( And to think PLT spoke of his family in an almost reverential way. Certainly not critical or derogatory).
So back to the top. Phillips’ approaching weak storm front was always clear.
The mere fact that he crafted his four points with such arrogance and apparently refused to have at the ready a detailed analysis of the tax plan was a clear indication that this storm was all appearance of huff and power but realistically signifying nothing as a serious political change entity.
But heh, he still has time to adapt and get traction. Maybe Bajans do need Sunday School direction in our moral wasteland!
@ Grenville
Did Bushie not advise you to ignore dribbles?
Can’t you recognise hecklers when you see them..?
Has Bushie ever been wrong in his assessment of bloggers?
You behaving just like Caswell…
Dribbler is an albino-centric adoptee who is living his dream off the scraps of his heroes’ tables…. It is his idea of bliss. The closest he has ever come to a Boardroom is probably when they need a black face for a photoshoot …and they bring in a few of the help to accommodate them….
You are proposing a philosophy of enfranchisement in a complex environment dominated by black, Bajan, brow-beaten brass blows….
YOU REALLY EXPECT HIM TO GET IT…?
Steupsss… or even the BBBBBs…?
As you well know, Bushie has been ‘behind the veil’; ..in front of it; ..has pissed on it; … and put has some good holes it it’s donkey….
But this is nothing to do with wunna…. This has all been orchestrated by the Bushman’s adopted parents in order to prepare him for some shiite mission – yet to be revealed..
LOL…
…it is just that they made the mistake of putting a whacker in Bushie’s hand right now, … so look out… or perhaps THAt was the mission…
ha ha ha
Whaloss !!!
dpD
Chuckle…..you will make a good diplomat…..
We await the castigation from his cheer leader and the master.
dpD
Hahaha…..wuhloss…cheerleader cussin you instead ….you who have not addressed his boss for a while….senility…..
@Vincent as de man said, not me and dat boozie.
A Bajan political aspirant called my honest remarks as another Bajan about his plans ‘trolling’ from a paid attacker. I dun wid he and dat. I wish the man well.
He obviously does not need my vote nor more relevantly my advice to my relatives and friends to sway a vote for him or others of his team to get where he wants to go.
@nextparty246
Dear Grenville, I was pointing out that your Dad once worked for one of the most prestigious and highly regarded global accounting firms. It was a compliment and it is public knowledge, so why you take umbrage is entirely beyond me. However I apologize without reservation for any for any hurt that I caused you.
I have tried to point out the realities of how businesses will treat your ‘corporate’ revenue tax by pointing to credible research and reliable statistical evidence. I have calculated first order estimates of how much your tax strategies will yield in revenue. In response you have given me some small business anecdotes and appealed for protection from Bush Tea.
I rest my case.
Best regards,
Peter
@Bush Tea
Since Grenville has abandoned the field of play I will move on to other threads, but I wanted to let you know that I am looking forward with great enthusiasm to hearing more about YOUR “philosophy of enfranchisement in a complex environment dominated by black, Bajan, brow-beaten brass bowls.” I do fervently hope that that is your “shiite mission – yet to be revealed.”
dpD
Chuckle……all fall down…..just so
I honestly cannot see this party with its present leadership that sees a political assassin behind every inquiry moving forward.
He has revealed his Achilles heal to all and sundry….does he not expect his opponents to take advantage of it?
He has put forward a visionless management model which coupled with his thin skin will be an uphill task for his cheerleader/campaign manager to sell to the public.
Ah well thats it…….
Oh shut up DO …Vincent!!
Ever since you admitted on BU, that your approach to management was to tell your workers that “you expect them to steal … so please leave back some for you” Bushie dropped you down in the common sense scale to CCC-
No wonder agriculture died….
Shiite man… after such an admission you should claim that somebody is using your name as a pseudonym on BU and talking shiite to damage your reputation (more than it already is)…
You are in NO position to critique Grenville’s management model.
…agreed?
Bushie
Hahahaha………..Skippah…..ah would too love a model to critique but ah ain see one yet.
Peter tried desperately to put together something coherent as far as economic matters were concerned for your boss to promote only to be cussed out of hand.
As far as Agriculture which is the future of this country he talks only about a fruit tree in everyones back yard.
Where is the developmental plan to carry the country forward over the next 20-30 years….totally visionless.
All you can do is to prattle and wave about an ISO management model…..to what end…..that by itself cannot help this country to move forward……..anyhow….go back to the bush….ah wasting muh time wid yuh.