Submitted by John A
Minister of Finance
The Honourable Prime Minister Mia Mottley

We have heard the word inflation being bandied about a lot recently, but what does it really mean to the average Barbadian in real terms?

I sent BU a menu which was posted on the the 4.4% growth NTSH blog – see menu. This showed what a popular beach restaurant in St Michael was charging for their offerings in 1975. At this time there is no clearer example of inflation I can think of than what this menu brings to light. The question then when we look at this menu and compare it to today’s prices, has to be, are we better off today than in 1975? As numbers don’t lie let us now turn to them and compare 1975 to now. In other words has our personal GDP kept pace with inflation over the period or are we poorer in real terms?

  • Coke large 25 cents 1975 cost $2.75 in 2023, 11 times more
  • Salad large $1.50 in 1975 cost $15.00 in 2023, 10 times more
  • Steak & chips $4.75 in 1975 cost 38.00 in 2023, 8 times more
  • Ice cream lg 40 cents in 1975 cost $9.00 in 2023, 20 times more
  • Cheese burger 75 cents in 1975 cost $9.00 in 2023, 12 times more

So the average factor of increase over 48 years on the above is 12.2 times higher prices.

One must now ask what has salaries increased by over the last 48 years? Well we know for 10 years under Sinkyuh we had a wage freeze, let’s subtract them and ask over 38 years instead.

If you were paid $1000.00 in 1975 and you got an increase of 4% over the 38 year period (48- lost decade), you would be earning $4560 dollars today. Now I don’t know how many got a 4% raise every year for 38 years but let’s be kind. This then gives us a wage increase factor for the period of 4.56 times.

In summary eating out increased by a factor of 12.2, but salaries only grew by a 4.56 factor over the same period. Now if we even take the 10 Sinkyuh years and assume a 4% increase in pay every year for them as well, the factor for earnings would still only be 6.79 times.

Now the OECD has forecasted globally an increase in GDP of 2.7% with a rate of inflation of 2.6%. This would mean you will not be poorer in real terms, at least not for 2024 if their predictions are correct. I have also included for you a survey of GDP done by Global Finance for the period 2018 to 2022, which is worth a read as Barbados is included and it covers the pre-Covid and post-Covid economy.

Finally take a read of the article by the ILO titled “Rising inflation brings fall in real wages.” Next time you wonder why you working for more but still always “ brek”, just remember the 40 cent ice cream from 1975!


  1. @John A

    Your argument is understood but there is a reality.

    The consumption behaviour people have become addicted means that demand for goods and services combined with how input costs are manipulated by market conditions/speculators mean inflation will always be with us. This is more apt for a small open economy like Barbados.


  2. At the rate that Missing In Action is borrowing money that has to be paid back by our great great grand children it WILL get much worse.
    The borrowing needs to stop.

  3. @ David

    If you look at the GDP chart you will notice Barbados is one of I think 3 countries, that at the end of the 5 years had a GDP that was still negative by 0.6 percent. Lets be honest we will never be China but we have to diversify our economy to get more out of the none tourism economy. We cant continue to bet the house on a one leg economy.

    When you look at the numbers you will also see why we have to borrow so heavily. We keep borrowing to cover the deficit. Mind you not only Barbados is in this position so we are not alone. If you notice the average multiplier of 12 also would hold true for a car. In the early 70s a Datsun 1600 was around $5500 wheras today a similar car would be over $60,000. Land same story.

    I also read a review on the USA economy that stated that this generation will be poorer in real terms than their parents. The thing is though that is partially because like here, they spend on the wrong things too. We just have to be more productive with the economy.

    • @John A

      We agree, the underlying issue will always be leaders pandering to conspicuous consumption habits of our people. Mind you, the blogmaster will never negate the goal to grow the economy, however the growth must be sustainable based on our limited resources/capacity.

  4. The other thing we need to do is to stop spending so heavily in non productive items. While this spending does go towards the GDP it does little to help our personal growth.

    This comment may upset some but its true.

    • @John A

      The reality is that we live in a time where populism is the approach of choice, ordinary people generally tend to focus on what is sold to them. A contentious point some may suggest.

  5. @ David

    If you ask young couples today why they spend on cars and travel, many will tell you that they live for today because they have accepted they will never be able to buy a house. While house prices have not escaped the inflation net and it is true a decent house in the early 70s was around $75,000, could they not have driven 2 old cars and not travelled less, but paid a mortgage instead?

    The truth is the education system does not prepare school leavers for the real world. Much of what it teaches is of little use to them in reality. While it may prepare them for a job it does little to prepare them for life in a financial world where budgeting and prioritized spending is key.

    • @John A

      That maybe correct to a point. We live at a time where materialism has reached a zenith. This is a consideration as well. Our leadership at every level of civil society needs to fashion a vision that reflects who we should aspire to be in order to nurture a wholesome society. Fluffy words but it is why we invested heavily in education, time to see the ROE.

    • @ John A

      RE: “The truth is the education system does not prepare school leavers for the real world. Much of what it teaches is of little use to them in reality.”

      Yet, several Barbadians and persons from other ethnic minority groups were able to capitalise, benefit and became successful as a result of the same system.


      RE: “While it may prepare them for a job it does little to prepare them for life in a financial world where budgeting and prioritized spending is key.”

      Some BU contributors are fond of reminiscing about ‘the good old days.’
      My great-grandmother was a maid and great-grandfather, a plumber/driver at the then Water Works.
      They, similarly to several other Barbadians in those days, DID NOT have any formal education, but were able to ‘budget and prioritised spending,’ to build their home.

      Additionally, perhaps we’ve chosen to conveniently ignore the fact that, after Trade Confirmers Limited, Bank of Credit & Commerce, Narsham Insurance, CLICO, government bonds etc, the island’s financial sector remains poorly regulated, which may not inspire the confidence of young Barbadians therein.

    • @Artax
      I doubt many appreciate what regulation means exactly.
      And if the ongoing BL&P application to a regulator is any example, may (not unreasonably) assume regulators don’t function as intended. Hence, why are they required and what is their value?

    • NorthernObserver, the regulators are required by law. Unfortunately, the functions of FTC regulators are limited by the FTC Act.

  6. Our materialistic culture feeds the supply and demand beast. We will never be able to reduce imports and hence prices through local production based on how we operate.

    Also inflation only hits “certain” people. It really doesn’t bother others. As long as the status quo and mindsets remain we will be forever in this loop.

    That’s why meagre salary increases which are touted as wins for the labour movement should be seen as mere token gestures to keep the populace quiet.

    As for education, unfortunately it currently does what it was meant to do. Churn out workers and servants primarily.

    Just observing

  7. @ David

    You realise this new approach with the feeding of materialism only started 2 or so decades ago. Our parents were laser focused on their approach. There was little obsessive spending and the little they made was targeted towards their goals. Many middle class were not only able to buy a home, but also bought a piece of land and ” put down” for each child.

    Then again they drove probably a Ford Escort or Austin Cambridge and not a Jaguar so that helped.

    • @John A and Observing

      We have created a beast in an environment that nurtured it. It is what it is, we must deal with it.

  8. We have been on this path for fifty years.
    I prefer the assessment of Prof. Justin Robinson, who recently stated the economy has showed no real growth for forty years.
    High inflation, high food prices, propaganda driven employment statistics, increased taxation, increased bus fares.
    What did we really expect?

  9. @ William

    It sadly is 6 of one or half dozen of the other as you have correctly said. Truth is a large part of our GDP is driven by consumption of non growth items.

    • @John A

      The hardcode challenge is that key drivers of a capitalist system is stoking consumption, some may prefix with conspicuous.

  10. @ David

    The truth is unless we get the other sectors producing, relying on tourism only with make the next 48 years the same as the last 48.

    Remember Owen Arthur touched on this a few years back where he said we needed to raise GDP by other sectors other than tourism.

    • The article “read oddly” and then at the bottom “This article was generated with the support of AI and reviewed by an editor.”
      CIBC unload the Dutch locations, and irrespective of the CEO’s comments only need a willing buyer to unload the others

    • @NO
      Saw that earlier and that’s why I didn’t link it to my earlier comment on the Diaspora page.

  11. @ David

    Rum I think has the best positioned sector for exports, as all the major brands seem to be expanded their business for more export. David Seale for example just increased his bond spaces and other Brands seem also to be spending on their infrastructure. Local agriculture could also increase GDP activity and provide employment. What worries me is every project I hear our government speak on as ” coming soon” is tourism based. I see no diversification of our economy on the cards, its as if we learnt nothing from Covid.

    • @John A

      We have discussed many times the challenges associated with expanding rum production. We don’t produce enough molasses for a start which compromises rum identity etc/

  12. I here listening to Down to Brasstacks on VOB929.

    Just heard a woman in tears complaining about suffering in pain for many years.

    She also mentioned the mental anguish from having a settlement in the control of the usual suspects.

  13. The problem we all have to accept be we B or D, is that we have a GDP that is based mainly on Tourism and consumption. So unlike others we dont have much export in their.

    If you look at the graph you will see that for the 5 year period of 2018 to 2022 we did not grown the average GDP at all. Instead in declined by -0.6 percent over the period.

  14. woman deprived of a settlement while she has been suffering with chronic debilitating pain.

    buh doan mine me. Just venting because I have over one hundred thousand reasons to complain but I will continue to suffer in relative silence.

    • Thanks Hants, deprived of a settlement meaning delayed court case or with lawyers? Will try to listen to the podcast.

  15. @David
    you will be pleased to know, that buried in the appendices of the Fiscal Framework was
    “The effectiveness of the the Public Accounts Committee has been strengthened to allow the public to monitor in real time its oversight role, thereby ensuring full transparency.”
    Naturally this shiite is penned primarily for the anal operatives at the multilateral lending agencies and credit rating bureaus.
    Apparently, under the 2021 Procurement Act. the Chief Procurement Officer has the responsibility of reporting annual on all contracts awarded and the performance of the supplier awarded.
    Have you see that report yet?
    And it was late August the PM informed us that NIS Reports had been completed to 2015. Have you seen any of those yet?

    • More debt for taxpayers

      Government’s announcement that it plans to borrow $50 million from the Africa Export Import Bank (Afreximbank) to refurbish the Kensington Oval is not sitting well with the Democratic Labour Party (DLP).

      President Dr Ronnie Yearwood is calling for a more detailed breakdown of how the monies will be spent, stressing that there were several things about the deal that “do not add up”. He raised questions about the tendering process and whether a project which carries a price tag of $50 million can be undertaken in time for a Cricket World Cup that is a mere five months away.

      Yearwood queried: “Something does not smell right here. What is the precise breakdown of how this $50 million from Afreximbank will be spent? Does patching the roof and erecting the temporary seating cost $50 million? The T20 World Cup is only five months away . . . April next year. How can a $50 million upgrade be done in less than five months, considering design, spec, plan, procurement, tendering, and build? Where is this money really going?”

      On Monday Prime Minister Mia Amor Mottley announced that the loan, which would be allocated for the urgent refurbishment, would be obtained at a rate of seven per cent over a period of seven years.

      It is not clear if the refurbishments would take place ahead of the ICC T20 Cricket World Cup in April next year, during which Barbados would be host for several matches.

      Yearwood noted that Barbados was still repaying the loan obtained to refurbish the facility for the 2007 World Cup and the 2010 T20 World Cup and questioned the priority status of the proposed project.

      “Given the background of the economic report from the Governor of the Central Bank, and the fact Bajans are still struggling through a cost of living crisis where a small chicken can run you up to $30 or more, right-thinking Barbadians are asking Government about its priorities and borrowing, adding to debt.

      “Is the Kensington Oval loan, and at seven per cent, a priority when this Government, who undertook massive loans for World Cup in 2007, is still paying back that loan? The then Barbados Labour Party Government in 2006 borrowed $200 million, and we Bajans are still paying that back at $10 million a year until 2030. So now the same BLP are at it again, planning more debt,” Yearwood said.

      He also raised concerns about the terms of the loan, arguing that it was not as concessionary as it was being made out to be.

      “Mia Mottley thanked Afreximbank for providing the $50 million loan at concessionary interest rates; but at seven per cent, what is concessionary about that? This is the same Mottley that was bragging a few months ago about borrowing at a rate of one or two per cent,” Yearwood said.

      “Another loan for taxpayers to repay while we are still waiting to see the mini stadia that was promised. What happened to that? Is the National Stadium still happening? What about the $230 million Scotland District Road rehab project? What is the status on that? Lots of lofty plans and promises but no tangible outcomes, just more big spending, and more debt with nothing to show for it,” he said. (CLM)

      Source: Nation

    • New tax regime ‘no surprise’

      However, private sector needs details, says BPSA chairman Tannis

      By Colville Mounsey

      The business community was not caught off guard by Government’s announcement of an imminent change in Barbados’ corporate tax regime.

      In fact, says chairman of the Barbados Private Sector Association (BPSA), Trisha Tannis, they have been anticipating the move for the last two years.

      Minimum rates

      On Saturday, Prime Minister Mia Amor Mottley put businesses on notice that in an effort to ensure Barbados remains off the blacklist of the Organisation for Economic Cooperation and Development and other international regulatory bodies, consideration must now be given to the global minimum tax rates of 15 per cent for companies of a certain threshold.

      In 2018, Government lowered the corporate tax rate across the board, with companies currently paying between one and five per cent.

      Tannis told the WEEKEND NATION

      that with Barbados agreeing since 2021 to be signatory to the agreement, the commercial sector had been asking, without success, for implementation details in order to plan.

      “It was not something that we were not anticipating given the announcement by the G7 that this was coming. What we were waiting for, and still continue to do, were the specifics. We need to know how it is going to be applied because it is not necessarily going to be a straightforward formula as the Prime Minister referenced that this would apply to companies in certain thresholds.

      “We need to know which businesses are going to be impacted both internationally and domestically. Without those details, it is going to be difficult to determine what the impact will be on the business community,” Tannis said.

      President of the Barbados Chamber of Commerce and Industry, James Clarke, said his members were also awaiting the details to determine the impact, if any, of the change in the tax regime.


      “We need to know what the timeline on this is. Is this going to be implemented in unison with everyone else? Is this a requirement for coming off the grey list? We need to find out a bit more about all of these things. If the global community has agreed to a harmonising of the tax rates, I cannot see Barbados saying no,” Clarke said, promising a more detailed response after consultation with his members.

      Meanwhile, Tannis said that while any increase in taxes reduces the profitability of companies, this must be weighed against the deleterious impact of being blacklisted. She pointed out though that Barbados as a business jurisdiction has more to offer than just a low-tax regime.

      “Businesses are going to have to decide to what extent does this development impact upon their model and their cost-recovery mechanism. So it is something that we really need to brace ourselves for and prepare for, but there are much bigger issues that face the country such as being grey-listed or blacklisted,” the BPSA chairman said.

      “This is the bigger picture that needs to be outlined and the bigger implications for our economy. It is not an easy choice to have to make as we try to hold on to our international businesses. Thankfully, a lowtax regime is not all Barbados has to offer and we need to exploit some of the other benefits of operating in a jurisdiction such as ours.”

      Source: Nation

  16. “Just heard a woman in tears complaining about suffering in pain for many years.

    She also mentioned the mental anguish from having a settlement in the control of the usual suspects.”

    In a land where people prefer to suffer in silence and refuse to admit that they were outsmarted and robbed, the pain became so unbearable that the woman had to squeal.

    Further abuse is expected as the system will now try to punish her for crying out in pain.

    Here, use this Vaseline and try to relax the muscles involved.

  17. “The public’s apathy and cynicism regarding politics and promises by politicians is real.”
    Good morning folks
    Bushie notes that the concept of ‘Brass Bowls’, languishing in abject self misery and ignorance, is becoming clearer to more of us…

    Don’t try to put a smoke screen on the issue Boss…
    It is NOT just with politics and politicians….ALSO with..
    Lawyers and justice
    Education and common sense
    Health and healthy lifestyles
    Ownership and borrowing
    Public health, cleanliness and waste management
    Roads and transport management
    Public services – ALL…
    Steupsss.. It it MUCH easier to list areas where the (BB) public are not apathetic and cynical
    1 – Kadooment, Reggae in the hill, Jazz on de beach etc
    2- Buying a lotta shiite fuh Xmas
    3- De 11 plus (If they have a young child, or if they failed like Petra Wicky)
    4- ahhhh ummmm errrr …. whispering, complaining, begging

    What a place!
    What a curse!

    Reminds Bushie of Sodam and Gomorrah, when Lot was challenged to find just a few worthy men…

    One wonders if the visiting ‘angels’ are here yet…

  18. A wonderful Friday morning to the one thumper who exhibits moments of sanity.

    Perhaps, it may be the presence of brass bowlery that keeps him sane.

    Give thanks.

  19. The point we are missing is that when the science of economics is stripped of its mystery , and there really is none, it evolves like any other study.
    We have a Minister of Finance, who obviously does not enjoy the passion for the subject, and has deliberately left national discourse on government economic policy to others. Her main focus seems to be perpetual electioneering mode.
    Our economy is not evolving because there is no creativity in its leadership.
    We recall how some on BU praised a policy of borrowing and begging without even paying passing attention to the price and consequences of so doing.
    And the lack of vision and inattention to detail continues buttressed by now lame defenders of economic stagnation.
    Fortunately , for Mottley, the still floundering out of Parliament DLP, dubiously called the Opposition, seems incapable of surgically dissecting the lack of progressive economic planning now enveloping the country.

  20. @ Bush Tea

    Lord you painting a rough pictire of us as a people. Only interested in fetting and buying crap while paying little interest to financal planning and matters that concern them. Lord Bushie you mean we is a ” wuk up and lick out” people then?

    Dont tell nobody but I agree with you wholeheartedly. If I was the PM and I had new taxes to drop in wunna tail I doing it Kadooment week! That way wunna will not know till the next pay check.

    You see that thing called the 4th estate, I watch them at the PM talk ask a roll of foolish questions, which did nothing to seek enlightenment. Them want a bush bath and cut tail too!

    • @John A

      Could be some of you are overly critical? Listened to a clip of Olu Walrond who complained social media paints too negative a picture of Barbados’ state of affairs. #weoutside nothing to worry about John A.

  21. @ David

    Talk cheap but numbers don’t lie. Unlike some I don’t preach what I feel only what numbers support. The numbers I shared are clear for any to see, so I leave the spin doctors to try and challenge them. The problem is the numbers are there but they are not presented in a way that is easily understood. Cut away the pretty talk and big words and it’s there for all to see.

    Mind you let me say here that what the governor shared was all true. It was more a matter if what wasn’t said, but that is not his job. If the 4th estate was worth anything it would be theirs.

    • “Numbers don’t lie” is a verifiable axiom. But, people have to ability to manipulate numbers to substantiate their specific biases. More often than not, those particular individuals become overly upset or defensive when challenged by persons who may not necessarily agree with their opinions, while presenting an alternative perspective, or are simply asking for explanations of issues raised. John A, you presented a price list to BU and provided the forum with a comparative analysis of 1975 and current prices. Although I understand the point you’re making about inflation, I have to agree with the Blogmaster that such a discussion must be approached hollistically, so as facilitate a rational debate about the issues. Absent from the discussion, are factors of inflation during the 48 year period, such as costs associated with manufacturing, goods and services available for sale, wages etc, that are ultimately passed on to consumers.

    • @John A

      Rum talk.


      CBCBARBADOS (@CBC BARBADOS) posted: There’s concern about new economic threats to the island’s rum industry. The issue has been a talking point at a week long conference at the Radisson Aquatica. #CBCNewsBarbados

  22. @ Artax

    What you say is true in terms of conditions such as labour cost etc, the conditions though what ever they were, resulted in the outcome I showed. For example the 70s saw serious inflation due to the oil crisis, then they were years where inflation was basically flat.

    Going forward now in 2023 we may have high oil prices again. Then we had the hyper inflation with covid too. I think we will have other challenges as well in the years to come, I also foresee an economy growth wise much like the past. In other words higher inflation than growth at a personal level. We have to remember that for 10 years nobody got a raise, so to make up for that ground lost will be a difficult uphill battle for sure.

    Also remember the average multiplier of 12 between 1975 and now. That factor applies to many other things like car and homes as well, not just restaurant meals. If we had a crystal ball in the 70s and bought beach front land for instance we would be smiling today. I find the topic of inflation truly amazing to study. It shows how easy it is for the comfortable to become poor if they make the wrong financial decisions.

    • Yes, John A. I agree with your above comments wholeheartedly. You’ve provided the forum with further explanations to clarify points you made. But, let’s not forget economic polices of successive political administrations, such as financing tourism, while neglecting manufacturing and agriculture. Angelus, Husbands, Winifred Enterprises, Hamden, Mapp’s Garment Factory and several other popular manufactuers no longer exist.

  23. @ Artax

    The things is how do we get governments to stop depending so heavily on toursim? If covid did not teach them the folly of this what will it take to make them see that we must get other sectors to contribute more to our GDP?

    To be honest this worries me more that anything else going forward.

    • @John A

      To transform the economic sectors in Barbados will call for heavy lifting by public and private sector alike. What must drive it is robust advocacy from civil society at large. Our lazy politicians looking for a quick pension will not do it. Unfortunately the quality of individuals offering themselves for public duty low quality.

  24. @David

    They have to do it or the people will continue to get poorer in real terms.

    The numbers show clearly for even the biggest party loyal, that in 48 years we experienced a factor of inflation of 12 rougly but in the meantime we only saw a wage increase of a factor of 5 roughly. So lets say we do nothing, where will we as a people be in the next 25 years? What will the 30 year olds of today find themselves in?

    People dont realise the damage Sinkyuh did to the economy and people of this island. That 10 years of no wages while inflation rose, has left us in a position where I dont see us catching up in terms of our earning to cost of living ratio.

    Government has to act now to get the other sectors of the economy to contribute more to the GDP or the next 50 will the same as the last 50. The days of a one leg economy therefore needs to be a thing of the past.

    • @John A

      Some do not agree but nothing will change unless WE demand it. Unfortunately we allow conscious and unconscious biases to compromise our priorities.

  25. Apparently we are admitting that there really is no substantial or sustainable improvement in running the economic affairs of the country.
    Quite frankly COVID provided a perfect excuse for many people to hide behind.

  26. William you are so right. Instead of learning from it and changing our 50 year old economic plan, we used it as a scapegoat for why things so bad.

    If you look at the chart you will see Barbados is 1 of 3 or so countries who had an average net GDP between 2018 and 2022 inclusive. So that included the 2 best years of tourism before covid as well as the post covid year.

    • Impact of rising prices in Barbados

      By Tony Best

      With its economy on the mend, growth in its forecast and reforms “well underway”, Barbados’ tourism industry, which fuels most of the island’s economic expansion, doesn’t seem to be suffering significantly from rising prices.

      That assessment came from two of Wall Street’s leading financial and credit rating analysts, Richard Francis, director of the Fitch Rating Group, and Christopher Dychala, associate director for Sovereign Rating, also of Fitch. Both believe that although consumer prices, especially in the tourism sector, had risen in the post COVID-19 pandemic era the destination’s lucrative industry didn’t appear to have suffered unduly from rising costs.

      “We definitely saw an increase in costs during our (recent) visit this time and that is something we heard from the (country’s) business sector as well, that Barbados is a relatively expensive place and a high-cost place for doing business,” said Dychala who was quick to add that rising prices probably contributed to the fact Barbados’ economic recovery after COVID-19 didn’t match the pace of growth of some of its neighbours.

      “That may explain why it hasn’t gone back to pre-COVID levels but we understand there is a pretty solid base of visitors who prefer Barbados and to vacation (there),” said Dychala. “Certainly, the tourism rates from the UK we have already seen have recovered and even surpass pre-COVID levels.

      “Maybe there is additional demand for flights to Barbados,” he added when asked about the impact of rising prices on visitors and on Barbadians alike.

      Francis told the Sunday Sun that tourism, the main driver of the economy, had “definitely changed with big-name hotel chains coming on stream.”

      Neither Francis nor Dychala raised an alarm bell about any immediate prospect of the Israeli-Hamas war sending oil prices sky-high and contributing to a jump in inflation in Barbados.

      “It is an issue globally, especially small island countries, a geopolitical risk that could affect oil prices. It is more pressing for Barbados to continue its 2030 plan, (emphasising) renewable energy. It highlights the risks and vulnerability of being dependent on oil imports,” Francis said. “Barbados has a plan to shift away from oil imports and use more renewable energy and that could be advantageous.”

      Francis suggested that oil prices could change if the conflict in the Middle East expanded to include other countries, especially oil-producing nations.

      Fitch, one of Wall Street’s big three credit rating firms, recently upgraded the outlook on Barbados’ B credit rating, moving it from stable to positive.

      Source: Nation

    • Businesses to pay more taxes

      IN A MINISTERIAL STATEMENT, Prime Minister Mia Amor Mottley said yesterday that from Income Year 2024 with effect from January 1, the Income Tax Act, Cap. 73 will be amended to include the following provisions:

      There shall be a corporation tax rate of nine per cent, subject to the following regimes:

      Registered small businesses with gross income below $2 million will pay 5.5 per cent corporation tax.

      Corporation tax rates for insurance companies will remain zero per cent for class 1, and two per cent for classes 2 and 3.

      International shipping business will remain taxed under the current tax regime established in 2019.

      Multinational enterprises whose parents or related entities have not implemented or are subject to an Income Inclusion Rule and Undertaxed Profits Rule will pay 5.5 per cent to one per cent corporation tax and no Qualifying Domestic Minimum Top-Up Tax.

      • A Top-Up tax will be levied against multinational enterprises subject to the Global Anti-Base Erosion Model Rules to ensure that they are subject to an effective tax rate of 15 per cent.

      The new corporation tax rates will only be applicable for that portion of profits in income year 2024 earned from January 1, 2024. (SC)

    • Not all must pay

      Some small businesses excluded from new tax

      SOME LOCAL AND foreign-owned companies operating in Barbados will have to pay increased corporation tax from January.

      Government is raising the overall corporate tax rate from the current range of 5.5 per cent to one per cent depending on profits, up to nine per cent.

      It means that the current administration will be revamping the country’s corporate tax regime for the second time since coming to office and once more it will be in fulfillment of international requirements, this time the shift to a minimum global tax from 2024.

      Prime Minister Mia Amor Mottley announced the changes in a ministerial statement in the House of Assembly yesterday morning, noting “the future of this country is at stake” if the changes were not made.

      Some companies, including small businesses, will not be required to pay the higher tax and Government is introducing a number of tax credits “to encourage economic growth, development and employment in strategic sectors”, the Prime Minister said.

      Mottley also announced that from January 2024, multinational enterprises within the scope of the global minimum tax would be required to prepay corporate tax each month. Other registered firms here, except small businesses, will have to make similar payments from January 2025.

      The Minister of Finance, Economic Affairs and Investment told Parliament that while some businesses “probably” would leave Barbados because of the corporate tax increase, it was also possible there could be a “bounty” of surplus revenue from corporation taxes.

      Global effort

      Barbados is one of 139 countries which in 2021 signed on to a global effort to reform corporate tax, increasing it to a 15 per cent minimum tax rate. The initiative is led by the Organisation for Economic Cooperation and Development (OECD).

      This higher tax rate, she explained, related to multinational enterprises with revenue exceeding US$800 million in relation to the Global Anti-Base Erosion Model Rules (GloBE Rules). Jurisdictions are also allowed to impose an “additional tax of up to nine per cent on certain intergroup payments”.

      “The GloBE Rules are, therefore, designed to ensure that large multinational enterprises pay a minimum effective tax rate of 15 per cent on the income arising in each jurisdiction in which they operate, through the application of a system of top-up taxes in other jurisdictions (an Income Inclusion Rule and/or an UnderTaxed Payment Rule and/or a Qualified Domestic Minimum Top-up Tax),” Mottley explained.

      “Where, for example, profits earned by a group subsidiary located in Barbados are taxed at an effective rate of only five per cent, then the new rules will come into play from 2024.”

      She added: “Therefore, with the global minimum tax rate of 15 per cent, the jurisdiction where the parent company is based will have the right to charge an additional ten per cent in taxes on the subsidiary’s profits. This will ensure that even those profits located in Barbados are ultimately subject to an effective tax rate of 15 per cent.

      “Any top-up tax to be paid in the other jurisdiction might be reduced or eliminated by any qualifying domestic minimum tax which allows Barbados to collect the tax.”

      In line with Barbados’ commitment to these GloBE Rules, the Prime Minister, therefore, announced that from January 1 “there shall be a corporation tax rate of nine per cent subject to the following regimes”.

      Business as usual

      Exceptions to this include companies whose gross income is now below $2 million and which is a registered small business. These enterprises will have to pay a 5.5 per cent corporation tax rate.

      The corporation tax rate applicable to insurance businesses will be zero per cent for class 1 (including captive insurance firms), and a two per cent for both class 2 (all other insurance companies that insure and reinsure third-party risks) and class 3 (including insurance brokers and managers) insurance companies.

      Mottley also said it would be business as usual corporation taxwise for international shipping businesses for the time being, but added that “after consultation with the sector, the Ministry of Finance would advise on whether Barbados should adopt a new regime for international shipping companies for the fiscal year 2025 and onward”.

      The Prime Minister also said effective January 1, for those multinational enterprises to whom the Income Inclusion Rule and Undertaxed Profits Rule did not apply to their ultimate parents or “constituent entities” their corporate tax rate would remain at 5.5 per cent to one per cent. For these entities there will be no application of the Qualifying Domestic Minimum Top-Up Tax.

      The new top-up tax will be imposed on other multinational enterprises “to ensure that they are subject to an effective tax rate of 15 per cent, as per the GloBE rules, the Minister of Finance said.

      Mottley said there would be new tax credits added to existing tax allowances and that these “shall be offset against any other tax liability for a period of four years”. Those announced were the Qualified Jobs Credit, and Research and Development Credit. A National Development Credit is also under consideration.

      Mottley said she and other officials met in Canada with major longstanding business partners there as Government seeks to maintain and grow Barbados’ global business from that country.

      Pointing out that 72 per cent of Government’s corporation taxes are paid by companies for whom most of their profits, if not all, are made outside of Barbados, the Prime Minister told the House she would also meet this week with officials from the OECD and members of the French private sector.

      “I expect over the course of the next two to three months that we will also have to consolidate our existing business with respect to entities in the United Kingdom, Europe, United States of America and CARICOM and as far as possible minimise therefore the [corporate tax increase] downside risks,” she said.

      “Do we expect some businesses to leave? Probably. But we do believe that all will not leave and we do believe that our continuous engagement with them can make the case for their remaining in Barbados,” Mottley added. (SC)

      Source: Nation

    • Rum producer laments delays in GI registration

      Article by Marlon Madden
      Published on
      November 4, 2023×475.jpg

      The delay in the registration of a potentially lucrative graphical indication (GI) for Barbados rum is not sitting well with this island’s rum producers, who have been trying to get it in place for the past several years.

      On Friday, master rum distiller and owner of Foursquare Rum Distillery Richard Seale argued that the delay was a result of authorities not understanding the importance of having the GI in place.

      He said while he was not pointing any fingers, it was simply unsatisfactory and unacceptable that the industry was still awaiting approval of the trademark for several years from the Corporate Affairs and Intellectual Property Office (CAIPO).

      “Government has never really understood it because we have lived off making sugar . . . Therefore, I don’t think they really take seriously, IP (intellectual property),” said Seale.

      The first application to CAIPO for a GI was made by Export Barbados (BIDC) but was said to have required amendments and was subsequently abandoned following objections from a prominent distiller.

      However, another application was submitted by three of the island’s rum producers in 2020. That, too, required some changes but they were not made aware of that until last year.

      “So we responded accordingly [and] we have not heard anything since . . . . To date, three years, the application has languished in CAIPO,” Seale told those attending the rum panel discussion of the annual Barbados Rum Experience at the Radisson Aquatica Hotel.

      “The seriousness of the issue is that it is not understood because Barbados simply does not have any experience and true understanding of selling to the world valuable, artisanal products. So they don’t grasp the concept that the more we invest in Barbados rum and the more valuable it becomes the greater the need to protect it.”

      He said there continued to be concerns among local rum producers that there is no guarantee any rum overseas labelled ‘Barbados rum’ was actually from the island, and that the country continued to lose out on precious foreign exchange earnings as a result of the rum not being protected.

      A GI is a sign that specifies that a project originated from a particular location, with the qualities, characteristics or reputation of the product depending on the place of origin of the product.

      “The greater the value it has, the greater the exposure to exploitation . . . . As long as you create something of value, it will be exploited if you don’t protect it,” Seale told the gathering of international rum connoisseurs and specially invited guests.

      Questions were raised by a former CAIPO employee about whether the delay at the government department was a result of a backlog as well as the need for more staff.

      Seale said while there was no question those could have contributed to delays, “at the end of the day, if government is serious about protecting intellectual property, they will give the office the resources they need”.

      Barbados TODAY understands that among the stipulations in the initial proposed GI are that rum distillers must use Barbadian water to make their rum and that the rum must be aged here.

      Seale explained that the application submitted by three of the island’s rum producers was that Barbados rum be produced on the island “straight through to bottle”.

      “In other words, there is no prescription on the methods to be used because one of the wonderful things about Barbados is that we have great diversity between our producers,” said Seale.

      Foursquare had also submitted an application for a GI for Falernum in 2020, but Seale said they are yet to receive a response from CAIPO. (MM)

  27. It will be very interesting to see how we are going to reach one billion dollars in earnings from rum.
    Might be a bit easier than making chicken more affordable .

    • It boggles the mind why we have not integrated local production of food and other goods with the tourism sector to a greater degree. It boggles the mind.

  28. @ David

    So imagine what the inflation factor will be over the next 25 years! We know the last 48 was an average factor of 12, so anyone want to guess at the next 25 based on what is unfolding?

    All the vendors are doing is confirming what we all now know and have discussed above and that is we continue to get poorer in real terms.

  29. Some things are substantiative and only a madman would question their existence and some things only exist in the minds of madmen or party faithful.

    I was listening to a caller on Hants favorite (Brassb̶o̶w̶l̶s̶/tacks)show and he gave a list of his party many accomplishment. Like his colleague on BU he put a few items in the win column that (1) should not be there, (2) may easily be reversed with the passage of time and (3) their value can be questioned.
    Here is the lis
    Debt to GDD Ratio down
    Credit ratings gone up
    10 consecutive quarters of growth
    Sugar being packaged and exported
    Exports in 2022 being more than 20% in the previous year
    Restoration of free education
    Sewage problem fixed
    Improvement in water supply
    Increase of salaries
    Extension of our independence
    Electric (some shit)

    I don’t care who you are answer me this. Does Motley’s miserable motley mistake making misfits deserve another five years based on the above record.

    • $903M LOAN PLAN

      Multilateral institutions to finance bulk of Govt’s needs

      By Shawn Cumberbatch

      Government is planning to borrow $903 million this financial year to cover a large portion of its funding requirements.

      The majority of the money – $703 million – will come from the International Monetary Fund (IMF) and other multilateral institutions.

      In a new Medium Term Debt Management Strategy prepared by the Debt Management Unit of the Ministry of Finance, Economic Affairs and Investment, the authorities say the continued dominance of external borrowing will be “initially more costly”.

      This is because of “the increased cost of multilateral borrowing, stemming from the variable [interest] rate benchmark”.

      However, Government said its continued use of a strategy heavily weighed towards foreign borrowing “capitalises on readily available funding sources over the medium-term, while gradually rebuilding the domestic market in the face of strong signs of increasing market confidence”.

      This is detailed in the Strategy for this current fiscal year 2023-2024 to 2025-2026, in which Minister in the Ministry of Finance, Economic Affairs and Investment, Ryan Straughn, said “the borrowing plan for 2023-2024 capitalises on the strong relationships built with official sector development partners, as well as domestic stakeholders.”

      The minister said the debt plan “evaluates the costs associated with various forms of available financing within a framework that is consistent with an acceptable level of risk.”

      “It is reflective of our commitment to reduce the debt-to-GDP ratio to 60 per cent by 2035/2036 and the associated policy reform efforts articulated in the Barbados Economic Recovery and Transformation Plan 2022,” he said.

      “The publication of this [Strategy] seeks inter alia to continue to enhance debt transparency and accountability, while providing greater context around Government’s borrowing decisions.”

      The document said that at March 31, 2023, public debt was approximately $14.27 billion, about 119.6 per cent of GDP. The Central Bank of Barbados’ most recent quarterly report has debt at $14.44 billion at the end of September – 115.4 per cent of GDP.

      The new Strategy said Government’s gross financing requirement for 2023-2024 “is projected at approximately $903 million, approximately 7.1 per cent of GDP”.

      “This sum is exclusive of $495 million in treasury bills, which will be rolled over, as per the agreed terms in the 2018 Domestic Debt Exchange and $220.6 million, which will be covered by Government’s overdraft at the Central Bank of Barbados,” the Government Borrowing Plan 2023-2024 section of the document outlined.

      It said that the $903 million would be financed mainly via $703 million in external loans. This will be comprised of $276 million in investment loans, $200 million in policy based loans, $151 million from the IMF Resilience and Sustainability Facility and $76 million from the IMF External Fund Facility.

      Government also expects to secure $176 million from the sale of domestic bonds, and $24 million from the sale of treasury bills, by the time the financial year ends next March 31.

      The document explained that while four debt strategies were considered, the one chosen “which utilises majority external official sector funding to meet gross financing needs, was considered as the preferred option”.

      “Though initially more costly, it capitalises on already identified sources of financing, in addition to fulfilling Government’s objective of reigniting the domestic securities market. The success of this strategy will be heavily dependent on the completion of the necessary reforms to satisfy the structural benchmarks and other conditions precedent to access the funding,” the report stated.

      Under the chosen strategy, the status quo will remain, meaning that “over the medium term approximately 77.8 per cent of gross financing needs will be met from external official sources, mainly multilateral [and] the remaining 22.2 per cent of gross financing needs will be met from domestic security issuances”.

      “The increased cost of multilateral borrowing, stemming from the variable rate benchmark, will need to be continuously managed with a view to mitigation through available liability management operations and switching to fixed rates based on a cost benefit analysis,” the Strategy added.

      Source: Nation

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