Still no clarity
IT is amazing how headlines change in a week. From “Fees to Increase” in this newspaper last Thursday, to “Mia: No Guarantee”, in another section of the press, one conclusion which must be reached is that things are rocky at best and challenging at worst for the island’s economy.
I took no solace in my column of last week when I asked about what is the true state of our economy. From a purely professional observation, no definitive answer has emerged as of yet. Still the same pirouette around the real substantive issues related to the challenges within the economy.
Still the same reliance on private sector projects to start and tourism-related investments to commence... So what is different from the budgets and projections of past years, which were pilloried by some in this country and now?
Watching politics over the years has allowed me to rediscover an appreciation for simple mathematics. Especially in the term 2013-2018, we were consistently told that the maths does not add up.
We were told that Government was suffering from implementation deficit and that the ease of business needed to be improved. We were told that productive sectors other than tourism and international transport had to contribute, but where are those same refrains now?
This country is caught in a nexus, but some are just in a convenient memory fog and choose not to acknowledge it.
Budgets are about give and take. Governments have to raise revenues to facilitate its operations on behalf of its citizens. This includes services, inclusive of health care, sanitation, repair and maintenance of roads, water delivery and facilitation of services which citizens require, such as licenses, road tax, property taxes and other things.
So beyond the political actions which secure votes, at some point reality sits in. Look at the services which were mentioned earlier and ask yourselves who actually foots the bill. Sanitation is now solely funded by taxpayers, especially the Sanitation Services Authority, funded by a Garbage and Sewerage tax.
Yet, the controversial tipping fee was scrapped. Are we going to rename it and then slide it back in the tax revenue agenda and say pay it for “love of country”? Note that the Prime Minister mentioned fees which have not been raised for decades, so tell the public what will be raised, by how much and how much revenue is intended to be collected from these actions.
But I go further. The $1.50 per day per customer for water has been in effect for almost two years, yet no consistent information about the quantum of the revenue generated has emerged. This, coupled with the doom and gloom drought projections and the suggestion that water restrictions could be coming, should make ordinary Barbadians hopping mad. Poor communications, late placement of press releases related to prospective works, outages, all make for frus-trating experiences for customers. If you pay more, what should you expect in return?
What about health care? Is it hard to fathom that user fees will not be on the horizon for the Queen Elizabeth Hospital (QEH)? The Prime Minister announced additional funds going to the QEH, but where will that money come from? How will it be generated?
Government has to achieve its 6 per cent target on its current accounts. Those accounts are primarily being supported by direct taxation. So to maximise returns, where do you think the attention will fall? Use your brains everyone.
It is basic maths. Corporate tax rates have been slashed, which means there is a shortfall in Government’s revenues. Successive quarters of negative growth mean that the real economy has shrunk and Government’s fiscal position has been saved from loans from major financial institutions and taxing its citizens.
No growth means that decisions have to be made. Imagine a house with several tenants. Government has chosen to evict some of those people, but still ask them to pay for the upkeep of the house that they want them to leave. Akin to paying property taxes when you get an eviction notice.
Loss of employment means less discretionary spending power for citizens who for the most part are paying bills, not engaging in activities to spur the spending that merchants like. Spending will therefore be seasonal.
Just an aside in closing. Barbados has awarded offshore oil exploration blocks. No fanfare press conference, just a GIS release. After the fanfare about the blue economy, what protections are there for the green economy, notably the environment, marine or otherwise, when oil platforms are erected off Carlisle Bay? What safeguards are in place in the event of a potential spill? Stone cold silence, but maybe we as a country have allowed for this dis-respect.