Economy in focus ... real talk
Real talk... if you read certain sections of the media, you would be convinced that this island has been economically blown to smithereens and that we need a hero to fix our issues.
I thought this type of thinking was as old as the Bonnie Tyler classic hit ‘I need a hero’, but we continue to push ourselves along these lines. The classic fight between socialism and stark capitalism is raring its ugly head again and it will be a factor in the upcoming General Elections.
I happened across a Report entitled ‘Revenue Statistics in Latin America and the Caribbean, 1990-2015’ published by the OECD, which looked at tax revenue and structures, for 24 countries in Latin America and the Caribbean, including Barbados.
The report stated that across the region, the tax to GDP ratio increased by an average of 0.6 per cent, which was driven by a 0.3 increase in taxation revenue from VAT, and a 0.2 per cent increase in excise taxes. It was also stated that this coincided with a contraction in real GDP in these economies by 0.5 per cent in 2015, blamed on a weaker global economic situation and lower commodity prices. Taxation levels increases the most in the Bahamas and Mexico – by 2.6 per cent and 2.3 per cent respectively, with Peru being the lowest, with a decrease of 1.7 per cent. The changes were reflected by tax reform measures.
That report also cast doubt on the suggestion that only Barbados has instituted a high taxation level. It stated that since 1990, the upward trend in tax-to-GDP ratios, coincided with rises in VAT, between 1990 and 2002 in most countries, but also between 2002 and 2015, taxes from income and profits also increased as well.
Barbados, the Report stated, in 2015, had a tax-to-GDP ratio of 31.3 per cent and was deemed to be over the average. This while the island was within the company of Trinidad and Tobago, Jamaica and Belize – in the Caribbean. It was also noted that Barbados trailed Cuba, Jamaica and Trinidad and Tobago in terms of the growth in tax revenue changes from 2014 to 2015.
In fact, tax-to-GDP ratio in the period 1990 to 2015 was interesting. It went from 23.3 per cent in 1990; to 27.2 per cent in 1995; 29 per cent in 1998; 28.9 in 1999; 30.2 in 2000; 31.2 per cent in 2001; 29.6 per cent in 2002; 31.2 per cent in 2003; 31.2 per cent in 2004; 29.5 per cent in 2005; 30.5 per cent in 2006; 30.2 per cent in 2007; 31.1 per cent in 2008; 30.5 per cent in 2009; 30.6 per cent in 2010; 32.4 per cent in 2011; 33.1 per cent in 2012; 29.5 per cent in 2013; 30.4 per cent in 2014 and 31.3 per cent in 2015.
Looking at these figures, it makes a myth of the argument, that Government has engaged in a wild taxation spree. Based on the statistics, which span three Administrations, the outlier years were 2012 and 2015, in terms of significant increases in debt levels, compared to other years. Those years were based in times when the impacts of the global financial crisis were being felt combined with challenges with the two main drivers of the economy, including tourism numbers being down and the International Business sector facing issues as well.
The point was also made that Barbados was below the OECD average in some key areas. These include taxation on income and profits – at 6.2 per cent versus 11.6; social security stood at 6.3 per cent versus 9.1 per cent; property tax 1.7 per cent versus 1.9, with the only reversal in taxes on goods and services with the OECD average being 11 per cent and Barbados being at 14.9 per cent.
In the interest of full transparency, taxation revenue has increased from 1990 when it stood at $942 335 to $2 744 363 in 2015.
I made sure that I looked for a full array of sources on the taxation issue in Barbados to fully present it to readers. For too long, we have heard presentations from interest groups on this island’s fiscal issues, but I want to get a source removed from the political and social gridlock to expose the myth that Barbados is fully removed and immune from regional and global realities.
From all indications, one of the key issues in the next Elections will be the economy. It is necessary for Barbadians to arm themselves with more than just the political posturing and think about the issues which impact Barbados.
It is too important an issue to delegate to others. Think for yourselves.