The Grenville Phillips Column – Governing By Fear or Faith

Grenville Phillips II, leader of Solutions Barbados

Some are surprised that the Government has increased taxes in the recent budget.  However this was to be expected since the direction that they are carrying us requires them to keep increasing taxes.  When the DLP administration formed the Government in 2008, they found themselves on an unsustainable economic path, where they had to raise massive revenues to manage the level of debt left by the previous administration.

The DLP had two choices – to govern by faith or by fear.  The DLP could have had faith in us by lowering taxes as Owen Arthur had done, and for which we recommended that he receive a knighthood.  The second was to distrust us and burden us with ever increasing taxes while hoping for a miracle.  The miracle was to be in the form of Government revenues benefitting from a significant improvement in the global financial situation.  The Government chose the latter path.

Since increasing taxes is consistent with governing by fear, we should not be surprised whenever they are raised.  Rather, we should be surprised whenever that are not raised.  The principal problem with the current administration’s economic strategy is that they simply will not listen to good advice.

Two years ago, Solutions Barbados published a tax plan that is workable and fair to all.  VAT has proven to be an unfair and unworkable tax system and will be abolished.  The Government procurement system has been corrupted to the point where is has negatively affected the national economy.  Highly qualified companies are excluded from participating in the national economy whenever the Government gives its favoured companies no-bid contracts.  Those excluded may be challenged to pay taxes and maintain their employees.  Therefore, all taxes owed to Government will be forgiven.

With everyone starting from a clean slate, everyone participating in Barbados’ economy will be required to pay their taxes.  Those businesses who choose not to pay taxes will be competing unfairly in Barbados’ economy.  Therefore, non-payment of taxes will not be tolerated.  Tax avoiders and defaulters will be required to pay a fine of 10 times the unpaid amount.  However, for this system to be fair and workable, taxes must be low, easy to calculate, easy to pay and easy to audit.  The Government will also need additional resources to carry out the necessary audits.

Personal taxes will be reduced to 10% of gross earnings with no deductions.  With deductions eliminated, public workers will no longer pay income tax.  Currently, the private sector pays the Government the taxes owed by public workers.  The Government does not actually give this amount to public workers; instead, public workers get to see the amount on their pay slips, and then see it deducted.  Therefore, what the private sector actually pays for is for Government accounts offices to manage this illusion on 25,000 public workers and their unions.  Those accounting resources will be used to carry out the new audits.

Currently, businesses pay corporate taxes on their net profits.  With this current system, it is possible to run a successful business for decades without paying any taxes.  Our plan is to close this loophole by reducing corporate taxes to 10% on gross revenues with no deductions.

Businesses with high net profits are expected to pay the corporate tax out of their profits.  Therefore, the price of their products should not increase.  Businesses with no net profits are expected to add the tax to the cost of their products.  Business with marginal net profits are expected to use a combination of the methods described above.

The obvious question is, what prevents businesses with high net profits to protect those profits and add the tax to the cost of their products?  The answer is that the market normally punishes such greed, since their products will be more expensive than their competitors.
Grenville Phillips II is the founder of Solutions Barbados and can be reached at NextParty246@gmail.com

125 comments

  • Arthur’s relevance to the landscape should be to share his wisdom with the poorakey parliament, his label. He created Mia if it is by his definition she is a problem.

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  • Owen needs an exorcism

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  • I am asking Mr. Arthur why he is silent regarding the meeting between the heads of the Private Sector; The Chamber of Commerce; Barbados Hotel and Tourism Association; Barbados Employers Association and the four Union heads. This is what you call a collaborative effort to look at that poisonous 10% NSRL. In the first place the Private Sector deal with the employer side, the Union deal with the workers side and the PM deal with the Government side, so why were the UNIONS omitted from the budget consultations? Pure hypocrisy and the great Owen ain’t say ah ting.

    Barbados is our home, political patronage will do us no good whilst Rome burn. We must be fair in our hearts and speak up as citizens of the great Nation. Regardless who is the Government, we must be honest within our hearts and speak up. Yardfowlism will get us no where.

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  • Well Well @ Consequences Observing Blogger

    lol…Old Baje..Grenville`s cure for all.

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  • Arthur’s point about tweaking VAT by adjusting the rate and expanding the basket instead of applying NSRL, solid waste tax etc should be discussed.

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  • Arthur wants to eliminate the basket of exempt necessities. That would be too much pressure on people who are barely surviving.

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  • OSA is on point….VAT was intended to eliminate the majority of taxes…..It was intended to be used as the vehicle to collect more or to reduce taxes.

    The DT administration despite being the originators of the concept under Sandi did not think it through as thoroughly as OSA,hence they wrecked the whole thing by bringing back a bunch of petty taxes.

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  • millertheanunnaki

    @ Old Baje July 14, 2017 at 2:19 PM
    “Arthur wants to eliminate the basket of exempt necessities. That would be too much pressure on people who are barely surviving.”

    We all know that OSA is one wicked vindictive old SOB; but to ascribe the above proposal to him is not on.

    The man recommends a contraction in the list of items currently exempt from VAT; not a total elimination of the so-called basket of necessities vital to the survival of those already at the economic margins.

    Putting aside his warped misguided and unproductively revengeful and bitter fixation with his imaginary demon Mia, he is making a whole lot of sense when it comes to the management of the current fiscal and monetary affairs of Barbados.

    The man although not the architect of the VAT regime for Barbados was the political overseer of its implementation.

    He was socially ‘empathetic’ enough to have accepted a proposal to cushion the negative financial effects the introduction of the regressive VAT would have on the low income earners.
    Hence the introduction of the reverse tax credit for those earning below the then living wage level which the current administration, for all intent and purpose, has practically abolished.

    The only VAT exempt or zero-rated goods and services should be financial services transactions; public transportation and primary public health services both seen as integral to economic activity and productivity; the production and distribution of non-processed food and the consumption of potable water up to the basic level deemed necessary to meeting the health and hygiene needs of the ‘ordinary’ household.

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  • @ Miller

    OK. I might have misunderstood OSA’s position but what about bath soap, toothpaste, deoderant and sanitary napkins? Don’t you think these should be exempt?

    There are many luxury products and frivolous products (think X-mas trees) that could bear some extra duty in order to pay for these additional exemptions.

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  • @ Vincent

    I trust that you still think there is a place for progressive income tax in Barbados.

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  • @ Cammie Holder

    Please fill us in on plans to revive and repackage the Cahill project.

    See
    https://www.facebook.com/groups/346776919021391/ at 27 minutes

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  • millertheanunnaki

    @ Old Baje July 14, 2017 at 6:04 PM
    “OK. I might have misunderstood OSA’s position but what about bath soap, toothpaste, deoderant and sanitary napkins? Don’t you think these should be exempt?”

    Not necessarily since they are deemed as primarily toiletries with sanitary napkins used by a specific gender and age group.

    Let them save towards their own personal hygiene upkeep instead of buying fast food from Chefette, KFC and the ever expanding chain of fat exploding joints.

    If you still insist on including them on a zero-rated list then, like your Xmas tree example of forex wastage, why not increase or introduce a ‘show-off’ tax on cars over 1,600cc’s imported for domestic purposes.

    Where in 2×3 Barbados with potted makeover cart roads can vehicles with engines in excess of 1,600cc be efficiently operated?
    It’s time Barbados takes a leaf out of
    Bermuda’s book of cutting the vehicular suit according to the landscape cloth available.

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  • @ Pacha
    Your comment at 3:42 about corruption and an earlier comment about HQI (high quality individuals) cannot coexist.
    ++++++++++++++++++++++++++++++++++++++
    Just saw your post…
    You are correct about the mutual exclusiveness of the two concepts. But that constraint only applies in any one particular realm.
    In the realm that you recognise, HQIs are (like you) just lucky to be born with special intellect or other talent, and should therefore be better placed to succeed at leadership…. being able to understand decimals and to know (for example) that if you collect $10 per person from 200,000 Bajans the total is $2M and not $20M.

    As to corruption, the very NATURE of the human being is corrupt…. both brass bowls and HQIs. Advanced societies are those that have developed mechanisms that motivate citizens to minimise corrupt behaviours by education, ethical incentives, moral persuasion, or by fear of harsh penalties…. (like your Guillotine)

    From the perspective of the bigger picture, (the OTHER realm that you dispute) the ONLY HQIs are those persons who have been endowed with the SPIRIT of BBE, and who therefore have access to an understanding of the TRUE purpose of life; the consequences of failure; and the opportunities of success.
    Obviously this is a different level of thinking than the relatively mundane foci that dominates here on BU

    So when Bushie says that we are all corrupt, it is from the latter perspective….and when it was asserted that HQIs would make the best leaders, it just says that they would do better at achieving the petty, flawed objectives to which we limit our dreams…. while

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  • Well Well & Consequences Observing Blogger

    It’s only limited intellect fools like Jackass Jones would continually mouth off about using bajan women as walking uteruses to increase population growth, broken homes, dysfunctional families, fatherless families and poverty on the island, when there are at least 39.17 million people scattered throughout the CARIBBEAN COMMUNITY, where migration would be a more intelligent, viable option, these islands have already grown their people…..

    https://www.barbadostoday.bb/2017/07/15/more-children-not-the-answer-un-official-tells-barbados/

    ……..a ready grown population suitable for migration….to engender an increased population on the island….but when ya stupid ya stupid…

    …..the government created difficult living conditions, created austerity, created economic problems and unthinking ministers and other groups want to create increased poverty, homeless mothers and fatherless children….to increase population size….and they got the nerve to talk about being the most educated in the Caribbean and the world….steupse.

    “More children not the answer, UN official tells Barbados
    Added by Marie-Claire Williams on July 15, 2017.
    Saved under Health Care, Local News
    4
    Amid concerns about Barbados’ declining birth rate, a United Nations official in Barbados has suggested that women having more children may not be the answer to the country’s population problem.

    UNICEF Representative for Barbados and the Eastern Caribbean Khin Sandi-Lwin said Government could instead tackle the issue from a global perspective.

    According to data from the United Nations (UN), the birth rate in Barbados has fallen from 4.42 births per woman in the early 1950s to 1.7 births today.

    It is against that background that Minister of Education Ronald Jones has led the call for women to have more children.

    However, Sandi-Lwin said there is another approach that Government can explore.

    “A global perspective is not about the population of one’s own country . . . . You hear politicians saying we need more children of our nation because we have zero population growth. But if you look at the carrying capacity of this planet, we have to look beyond the borders,” she said in an interview with Barbados TODAY, noting that migration within Caribbean countries can also contribute to population growth.

    “It’s been happening in the Caribbean for generations now – the migration of people in the Caribbean . . . and assimilating – either retaining the nationality of the other island, or becoming citizens of that island . . . . The emphasis should be on making migration work, rather than let’s have more children of our nationality.”

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  • Miller

    You could not have said it better about this wicked so so. Arthur is no good and he knows within the BLP camp that others pretending to be all stand up and moral are cut from the same cloth as him. If he knows that Mia is a villain; he might as well come out with what he knows about her so Mia can do the same with the secrets she holds for him. The BLP has plenty dirty linen, and none of them, except the newbies, can call another a name that is not likely to come right back at them. The long of the short concerning the long knives of the BLP matter is this- the BLP have proven themselves to be a wicked ass party with some shady nasty characters who did endless shite during their years as the government. And, Mottley in seeking to transform its image, has only damaged hers by expecting absolute loyalty to her vision and present leadership position, which has only succeeded so far in increasing her long list of controversies. Come clean Owen Arthur so Mottley can rid herself of the skeletons she has in her closet about you.

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  • Owen Arthur makes me laugh. Dr. Cheltenham says the party is more united since his departure, and Mr.Arthur cites Dr. Agard, Lynette “Damascus” Eastmond and Wendell Callender as reasons to debunk Dr. Cheltenham’s position. But someone should remind Mr.Arthur that the same Wendell Callender left the BLP as a sitting MP under his leadership and ran for the DLP in the 1999 election. Was that a sign of disunity? I guess not, because Farley thumped Callender. Oh and did Mr.Arthur march with the 25,000 in 1994, and what was the then state of the economy, better or worse than now? #askingforafriend

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  • Yes agree as stated by OSA The Blp is heavily relying on toxic rhetoric and ill advised political operatives to help them win the election.
    Mia seems to be operating on her own entitlement agenda an agenda which has served her well in attaining credentials for which she was not right fully deserving and having those in the know how giving her all right of passage
    Now presently we are seeing a similar development as the election approaches the operatives and foot soldiers of the elitist kind lines up with forward march to execute an agenda on behalf of Mottley with optimum approach demanding that the people owes it as a duty to hand over the reigns of govt to Mottley who as of now has not said a word as how she will govern barbados

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  • The inside shady dealings of the blp attached to those with sinister motives having an intent to create chaos would be exposed during this election cycle. Mottley has all but dug a deep well with a certainty of having motives exposed which would bury her polirtical asperations of a want to become PM

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  • Meanwhile the Barbados economy continues to groan under the asinine leadership of the quartet Stuart,Sinckler,Ince and the main culprit in the design of the taxation grabs of the rotten Dems,the Quisling Boyce.The US under Trump is similarly adrift and in a quagmire of Russo-American intrigue.JP Morgan in spite of a fantastic quarter bemoans the body politic compliments of the clowns in the Whitehouse,the blind mice lying trumps.JA Trump is threatening the free world with his Stuart like hogwash politics.One upmanship might score with dumbass Dems but running a country effectively calls for proper grey matter.

    https://www.theguardian.com/business/2017/jul/14/jp-morgan-chief-jamie-dimon-american

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  • Great news in Agriculture.

    ” Life should get a lot sweeter for bee farmers in the western parishes who now have access to a new $27-million state-of-the-art honey-extraction and bottling facility .

    By improving market access and increasing their earnings from the sale of honey, bee farmers the adjoining parishes of St James should enhance their livelihood significantly from the use of the plant.”

    ……… In Jamaica………

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  • BT: “As to corruption, the very NATURE of the human being is corrupt…. both brass bowls and HQIs. Advanced societies are those that have developed mechanisms that motivate citizens to minimise corrupt behaviours by education, ethical incentives, moral persuasion, or by fear of harsh penalties…. (like your Guillotine)”

    Our political system is based on the assumption that parliament would be populated by honourable men and women who want the best for Barbados. Sadly, this has proven to be a false assumption. Our system of govenment needs major changes to address the issue of accountability in all respects, not just corruption. Trying to change human nature is futile. All of the aspects of human nature displayed in The Old Testament are still very much with us. However, our laws and institutions have made some positive progress.

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  • Well Well @ Consequences Observing Blogger

    …fear of the alt right racist, facist terrorist is setting in, everyone knows they dont have a gram of intelligence between the 60 or 70 million of them….but they are armed with weapons and centuries of hate.

    ..this is what happens when you create a monster for financial gain and self enrichment, let it roam for centuries freely and never saw the need before to destroy it…..

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  • Well Well & Consequences Observing Blogger

    https://www.barbadostoday.bb/2017/07/15/residents-alerted-to-fake-facebook-account-impersonating-pm/

    Carson….is this you sending a fraud facebook message to collect money, pretending to be Fruendel, ya know ya got a reputation of lying to old people to get votes, promising to pay their utilty bill, taking the bill and never paying it causing their electricity to be turned off…lol

    They are waiting for you next year…lol

    “Residents alerted to fake Facebook account impersonating PM
    Added by Barbados Today on July 15, 2017.
    Saved under Local News
    4
    Members of the public have been advised of recent attempts to send messages or engage persons via Facebook Messenger by an individual or individuals purporting to be Prime Minister Freundel Stuart.”

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