The shape of the immediate future for some Barbadians became clearer during the past week as the layoff of some temporary workers and the cutting and shedding of certain allowances emerged as part of the Government’s plan to rescue the economy, save foreign exchange and protect the foreign reserves.
It is a bitter pill to swallow for some of those who have lost their jobs, but while we are sure that every minister is very reluctant to see job cuts of any kind, it must now be clear that the Government is faced with the reality that the fiscal deficit must be dealt with immediately, and that such bitter medicine is best taken when the Government has time to recover from any unpopularity before the next general election.
There are those who will argue that there were assurances of one kind or another and that the last thing they expected was employment reduction but, on the other hand, a temporary job is exactly what it says. It is a temporary job and if the employer is faced with the kind of crisis that the Government faces, then some jobs will inevitably be lost.
As a critical part of the process of governance, we have been witnesses to the deterioration in the public finances and, like every citizen, we recognize that action was necessary to bring the deficit in line.
A deficit of the order of nine per cent, which the Governor of the Central Bank said it was in 2010-11, is not sustainable and poses as much danger to the economy as did a similar deficit in the early 1990s.
We note that the reverse tax credit has been reduced and while we can understand that this was done as part of the process of tackling the fiscal deficit, the reverse tax credit was created deliberately to ensure that those who were exempted from the income tax because they were low income earners, could recover the value added tax paid by them.
These taxes are designed to be effective and they can be justified on that basis, and in this context, there is likely to be an easy saving of the sums paid out as reverse tax credit simply by cutting that expenditure.
The rate of the environmental levy has already been the subject of controversy, and this will need to be sorted out in quick time if the collection of this tax is to start in a timely fashion, and become an effective tool to help with the fiscal problem.
We also understand the nature of the consolidation tax, in that it is collectable in the same manner as the income tax. But it seems a little harsh to impose it upon the gross income, although that device too is designed to remove all the problems associated with defining income for those purposes, and it is therefore easier to handle in terms of determining the base and the rate.
We have dwelt upon these aspects of the Budget because they are tough measures which the minister has sought to justify on grounds of national necessity. Given that necessity and the short period for which we have been told they will be in force, the Government has a duty to ensure that the administration of these taxes is so well managed that they will in fact be of short duration. Efficiently administered, they will shorten the pain.