Since the recent budget was announced I have tried and tried to understand its contents and objectives, sadly so far without success.
Most of us, I am sure can understand the need to limit foreign exchange use and demand, but frankly we actually produce so little here, it is almost futile to think you can substantially influence consumer demand for imported items.
Two items stand out after hearing a car dealer state that the budget measures will add an average of $20,000 per new vehicle. I graphically recall Debbie Simpson saying years ago that Government collects more in taxes and duties from a car sale, than they do as a seller in profit.
It’s pretty obvious then that many normal working people will perhaps delay taking delivery of a new vehicle for another year or two, so it surely defeats the collection of additional taxes?
Yet our current ‘political leader’ seemingly is not tied to the same fiscal restraints as most of us are and can replace what can only be considered a luxury ride, as an when he feels like it.
Secondly, another sector will be inescapably disadvantaged, the local printing industry. I am not aware that Barbados produces any quantity of paper or board, so of course it will have to be imported. What they do is then enhance the value by overprinting and this will now to subject to both VAT at 17.5 per cent plus the increased and ridiculously (if not insultingly) named National Social Responsibility Levy of 10 per cent.
The net inevitable result is that companies will flock overseas for their printing requirements, where the costs are substantially cheaper putting potentially hundreds of jobs on the line.
With an almost overwhelming consensus among private sector business leaders predicting that prices generally will increase by 12 to 15 per cent,
it will further dampen spending and any hope of national economic recovery. Furthermore it will push those already on the breadline further into poverty. We used to see a former Prime Minister in one of our larger supermarkets regularly, but I wonder when our current Minister of Finance last pushed a trolley through the aisles to try and buy an average family shopping requirement for a week with only $200 to $300 to spend.
Purely from a tourism perspective, the inexorable associated inflationary effect, further devaluing our currency internally will curb demand for staycations and eating out in our many restaurants, even for the so called ‘better-off’.
While our commercial banks are awash with money, earning little or miniscule amounts of interest for their customers, but at the same time, Government is paying third world double digit interest rates on bonds to prop-up the monthly salary payments for public sector workers.
The 2 per cent levy on foreign currency requirements can be seen as no more than devaluation and many out there have already figured out ways to effectively bypass this additional tax.
Meanwhile, a handful of the chosen few have avoided paying taxes whatsoever with extraordinary unilateral concessions for at least 25 years and then reduced for a further 15 years.
Compound this by the fact most of their revenue does not even come to this island and they largely escape any duties and currency limitations, extra costs or restrictions at all.
One can only conclude that the world is not fair, at least not on our 166 square mile for the vast majority of the population.
Prime Minister Owen Arthur once declared that he wanted to see a car in every garage. This government has now determined that there be a bus stop in front of every house and they can’t even supply the busses. It is said that people deserve the government they get. Well in that case, we must be the lowest and worst people in the world. Nobody deserves this government.
Not difficult to understand at all…….its an election budget in reverse……..create artificial hardship for the masses and then prior to election provide a give away budget with thanks to the people for assisting in stabilising the economy,then on winning the govt again introduce the real rebuilding measures.
Unfortunately all present predictions indicate that this political stroke will work to the detriment of the Country and its people.
In essence politics over country.
To hell in a handbasket . . . tsk, tsk . . . it seems to be in our DNA to grin and bear it and blame everything on the evil entrepreneur.
All you need to appreciate is that for 7 consecutive budgets, and estimates, the revenue projections have been OVERstated, and the expenses UNDERstated. We spend more than we estimate and collect less.
Since the view of most on this blog is political, what many are missing is many Barbadians OWE their livelihood to the GoB, whether via direct employment or the tangled web of grants and subsidies. As such every budget in the recent past has been an election budget, and those who benefit are very aware that any change in direction ‘could affect them personally’. This may not be ‘corn beef and Sodabix’, but it has the same effect.
Bank accounts, as noted, are flush with cash. This idea that a 2% Fx surcharge is tantamount to a devaluation is misguided. It is minuscule, and a revenue grab. The exchange rate in the “gray market” is already past 3:1. The really bold move would have been after flooding the money supply, apply a 25% Fx premium. In other words, getting you coming and going.
NorthernObserver June 12, 2017 at 1:06 PM #
Your above recommendation is coming at a time when the IMF is offering a far less onerous plan over a 3 year period with debts being repaid as well…..but…..3 years is the sticker……they need it now……they must have it done in less than 11 months.
An interesting lesson on political play….lets see what happens.
The PONZI in Barbados fell apart for they ran out of money and now the naked truth is in everyone’s face, PONZI needs money and Barbados have to open their books to get money,
These crooks liars and scumbags will open their legs, this is not Cahill dealing.IMF or IDB May give loans based on evidence of ownership,
mine was an observation in response to the author who was “puzzled”.
IDB is fine. IMF or formal devaluation will be seen negatively by the general population, largely because of the GoB’s adamant words against both. An election call will precede either.
Appreciate the currency can trade in the “gray market” at unofficial rates, long before the official rate is affected. Locals want to keep a lid on such talk, because it is to their advantage to maintain the current peg. All around silence.
New airline ready to soar
WHILE ONE GROUP of airline pilots battle with their employer, a new airline is about to take to the skies in the region.Trans Island Airways 2000, owned by Barbados…
Note Minister Richard Sealy is in the press pontificating on the cost to Barbados tourism caused by the disruptions at LIAT. Hopefully he is not that naive that the problems at the airline will go away at the mouthing of a politician. Even if the mouthing is from the largest shareholder.