The Adrian Loveridge Column – Puzzled by the 2017 Budget
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.