Merry Christmas: Barbados VAT to 17.5%
“Finance Minister Sinckler says the increase to VAT is “temporary”. That’s okay, my new policy of buying as little as possible will be permanent.”
“That budget just cost our family at least $6,000 out of our pockets in 2011.”
…Heard at work this evening
Minister of Finance Chris Sinckler delivered his first budget today, and it was pretty much as it had to be given the state of the world’s economies and the heavy debt burden accumulated by Barbados over the last 20 years.
We lived beyond our means for the best part of two decades and not only that: we socked nothing away and spent like drunken sailors on everything except the fundamentals. We had cricket parties for half a billion dollars but neglected the hospital. We spent $400,000 on a $100,000 public washroom – and that was just one over-budget project of hundreds just like it. We forgot to change the oil in the garbage trucks, so we ended up replacing engines instead. We let the seawall deteriorate and then were so surprised when the street above it collapsed.
We gave a million dollars to buy the boys on the block some weed trimmers to “encourage the development of entrepreneurship and small business.” Do you see the boys on the block operating any businesses now? We gave millions and millions to every ad hoc community group that raised its hand and we never audited the spending or checked the results.
We had a great party while it lasted, but now it’s hangover time and it’s a doozie!
Taxes and government fees are headed nowhere but up, with a few stimulus bones thrown into the mix to confuse the wolves at the door.
Briefly, we’re going to borrow more money and increase taxes – then distribute a bit here that there to keep people from starving until tourism gets back to the levels we’ve always enjoyed.
The trouble with waiting for tourism to rebound is that many folks in the business don’t see it ever coming back again to what it once was from our traditional markets. That’s why our government is looking for new markets in South and Central America. Targeting new and closer markets makes sense considering that BIM is at the end of the Caribbean line for flights from Europe, the USA and Canada, but we’re right on the doorstep for Brazil and its neighbours.
And… Barbados is a very different destination for our South American friends. We’re a unique, close, safe and hassle-free destination. If we can just increase the comfort level for non-English speakers, we could see big gains from South America. Lord knows, we need them.
We’d like to hear from Adrian Loveridge on the tourism initiatives in the budget, but that’s our take so far.
One big omission in the budget
Minister Sinckler said very little about doing anything about the tremendous waste and inefficiency of government. We understand that he’s fighting a long-standing tradition of entitlement and lethargy in the public service, but unless the government tackles this head-on, nothing will change.
The Barbados government of the day can attract more tourists and foreign investors, but those efforts become useless when tourists and foreign business people meet our rude, uncaring and inept government workers (of which we have plenty).
This budget was about marketing our product and borrowing to keep the doors open.
We see very little about improving our overall product offerings to the world and we have to be concerned about that. The quality of our product has slipped and continues to deteriorate for many reasons. It’s difficult to effect repairs to the ship while we’re in the middle of the storm – but if we don’t start to concern ourselves with our overall condition of the ship, we are going to be in trouble.
“There are many Caribbean destinations out there with the same beautiful sun, sand and sea. Why should people choose to visit and invest in Barbados?”
That sign should be posted in every workplace and home in Barbados.
Budget Highlights taken from the Finance Minister’s prepared speech
Here are a few headline items…
Bus fares up 50 cents a ride.
Gasoline tax up 50%
Tax-free employee allowances for business travel gone.
Drug user fee of 30% to 70% of drug cost.
Immigration fees up.
PSV fees down 50%, license fees down 60%, employees must buy and wear a uniform.
Liquor license fee down 50%
Environmental levy gone.
Tourism: $20 million into a “Small Hotels Refurbishment Programme” and establishment of a “Tourism Loan Guarantee Facility”.
“In order to ensure that Barbados continues to retain its position as the second largest recipient of foreign direct investment from Canada, after the US, the Government proposes to allocate additional financial resources to Invest Barbados in the 2011 fiscal year to enable it to mount an aggressive and sustained marketing campaign in the major cities in Canada through a series of seminars and road shows over the next 12 months.
Additionally, with respect to Mexico, Government will explore the possibility of Invest Barbados appointing marketing representative in Mexico, who speaks Spanish, to assist in developing opportunities in the Mexican market as well as other countries in Latin America.”
Agriculture: Farmers can now apply to the BWA for a commercial water rate.
Manufacturing: Barbados to borrow US$50 million from foreign financier and spend it … how?
Cultural Industries – “Richard Stoute Teen Talent Competition Trust” $400,000
Audit Requirement for small businesses raised to $2 million, then to 4 million in 2014.
Tax credit for profitable businesses that increase staff by 10%.
Small and micro business funding $1.5 million.
Borrow US$45 million or US$55 million
Grant for children up $10 to $45 per week.
Mandatory Pension contributions up 10%