Gov’t not cutting public service wage bill

GOVERNMENT has said a loud ‘No’ to a recommendation that it cut the public service wage bill by a whopping $140 million.

This is one of a number of proposals which the Government turned its back on in keeping with a commitment not to cause undue harm to the country through its fiscal policy programme.

In his Budgetary presentation yesterday, Minister of Finance and Economic Affairs, Christopher Sinckler, said that Government did not consider this a realistic proposal in the current circumstances, since it would mean the retrenchment of more than 8 000 public servants.

The Minister said that it would be callous and insensitive to the plight of many ordinary workers in Barbados. He said it would also significantly “compromise Government’s operations and would place the burden of adjustment disproportionately and unfairly on one segment of the population”.

The Finance Minister said that other options such as reducing the VAT to 15 per cent while eliminating all zero-rated and exempted items were considered, but found at this time to be inappropriate. This, he explained, was because the overall impact of removing such things as the near 300 basic items from the VAT basket for the poor and the imposition of VAT on water, financial services, prescription medicines, medical services and hospital supplies, would be dangerously devastating on the population.

Government also felt that a rushed standardisation of the VAT rate across all vatable supplies, including hotel accommodation and direct tourism services as recommended by some private sector groups, would cause short-term harm to the tourism sector.

As for the recommendation of moving VAT to 22 per cent for gross revenue of $391 million in a single year, he said that while providing Government with adequate revenues, it would also have a pervasive effect on a wide selection of goods and services.

The Minister said they also looked at the option of reducing the level of personal non-taxable allowances from $25 000 to $15 000.

“While it was calculated that such a move would have brought in upwards of $72 million in a full financial year, it would be insufficient to achieve our objectives and we would have to impose additional measures elsewhere,” Sinckler added. (JB)