Minister of Finance Chris Sinckler has delivered the final nail in the economic coffin of Barbadians, especially the middle income group, while reversing the much treasured benefits of low income workers derived from their annual tax credit.
The nail not only punctured the immediate prospects of Barbadians but compromised the hopes and aspirations of those like us who climbed the ladder purely because of university education.
What an unfortunate display on the part of the minister with respect to the cut in financing for the University of the West Indies (UWI). The impression given for the past three or more years was that the financing of university education was the single largest reason for the fiscal crisis confronting Government. This was never the case. Simple arithmetic suggests that cutting the cost of UWI production by $26 million cannot correct a current account deficit of $550 million in a given fiscal year.
The disproportionate attention paid to the UWI, however, goes beyond numbers. It is the perfect example of leadership that lacks conviction and purpose. This kind of leadership turns in on itself, especially when it is forced to please the international stranger in our midst that it pretends not to worship.
Imagine that the very basis of our progress since Independence is now being denied to future generations on grounds of lack of affordability. This assertion is incapable of passing the test of reasonableness, furthermore common sense. Barbados’ only hope in the future is to improve the quality of its human capital, if it wants to regain its capacity to punch above its weight.
Yet, in its own arrogance, the Government succeeded in betraying the collective wisdom of the people for a sufficiently long period of time, only to turn inward on them in less than six months.
This week’s Budget is the ultimate act of betrayal!
The Budget’s contents again represent a complete lack of understanding of the way to restore growth to the economy. It imposed further cuts on the purchasing power of the income tax-paying class who for the most part are also the property owning class. Failure to recognize this reality is responsible for another senseless bout of taxation that will do more harm than good.
Having identified in my writings over the past four years that the financial crisis rests in the bosom of the middle class, it was shocking to hear that the Government cut the reverse tax credit in half. This has to be out in context.
Barbadians have experienced a cumulative rise in the cost of living of approximately 35 per cent since 2008. Public sector workers have not had an increase in salary, while private sector workers have not fared much better.
In the circumstances, the halving of the reverse tax credit is the unkindest cut of all for low income workers. This must not be interpreted to mean that the continued burdening of the middle income workers is acceptable. Indeed, all Barbadian workers have had to pay for the ineptitude of the Government.
At the technical level, the biggest folly in the Budget is that the Government has identified cuts in its current expenditure but has not accounted for its proposed increase in capital spending. Therefore, the stated objective of reducing the fiscal deficit is not guaranteed for the current fiscal year – 2013/2014. Time will tell!
The other big folly is the proposal to cut the pay of temporary workers in Government, while preaching that no worker would be disadvantaged by its policies. Though it was stated in the Budget, these workers will receive cuts in salaries of around 40 per cent, that is, working three as opposed to five days a week.
A few months ago, the Minister of Finance said he had to look for $7 million every month to pay temporary workers in Government. This translates into $84 million per year. On Tuesday, he identified that there would be a cut of $30 million in the budget allocation for temporary workers. Do the math!
It is regrettable that the much admired management of the Barbados economy, even at its lowest ebb, has reached a point of confusion that is best exemplified by the current Minister of Finance.
There is a kind of hard-heartedness that accompanies the delivery of the minister that some may mistake for boldness, when it is in fact a bold attempt to mask his shortcomings.
• Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy.