I MUST confess I was taken aback last week on reading that Government was removing the 50 per cent land tax rebate for individual producers of solar power given the massive hype on its alternative energy programme.
Since there was not the usual prior explanation in the official notification, it seemed a strange approach from a Prime Minister who – absent a republic – appears determined to make the green economy initiative a personal legacy.
It was during debate in the House of Assembly Tuesday that Minister of Finance Chris Sinckler explained the mystery, while denying a Government U-turn, blaming the misunderstanding on “flawed” drafting of the intent of the 2011 budgetary proposal.
At first blush, it seemed a plausible enough explanation since drafting errors are common wherever legislation is prepared for presentation to a parliament.
Still, one could not help but wonder, given the relative alacrity with which the rate of the controversial municipal waste tax was corrected, why would it take a Government all of three years to clarify the true intent of the rebate amendment approved by Parliament in 2012?
The cynic’s voice suggested it would be quite easy to blame the “error” on a faceless, defenceless draftsman somewhere in the Government bureaucracy which would help mask the true intent.
It is no secret this Government is broke.
It is also no secret it is searching high and low for money to finance even its day-to-day operations such as wages and salaries, despite the 3 000-plus layoffs.
What is not a secret is that one destination of Government’s financial forays will ineluctably be the back pockets of those public servants left who still enjoy certain allowances.
As much as the spin doctors will try to massage this one, they have a most difficult assignment in persuading John Barbadian this is not just another revenue-raising stream for a cash-strapped Government.
The Minister Of Finance had signalled his intent quite early when he complained about the allowances and deductions in the tax system and the $1.695 billion that was not exposed to taxation.
“I was making a very deep and fundamental point, I thought, about the fact that we have a tax system that has now collided, essentially, with a situation in which the areas where we got copious levels of tax revenues, we are not now having at all, and probably will not be accessible to us again in the same form.
“So, if you had a situation where you were able to offer to the public a whole set of things free of cost, waiving taxes and all of that stuff, and that is not now available to you, or you did it because you had that money and that money is not now available to you, it has to have an impact on the average citizen and business and household in Barbados.”
Though we all glory in preaching the virtues of home-grown programmes, it cannot be only by coincidence that one of the central observations of the just concluded Article IV Consultation by the International Monetary Fund (IMF) was that Government should in the near term focus on fiscal adjustment, the burden of which should fall on current spending, which it noted had expanded about 10 percentage points of GDP since the mid-2000s.
“The team encourages the Government to continue lowering the overall wage bill, which is one of the highest in the region, and reform the civil service to manage this transition,” the mission said in a statement.
“Review of social spending would be important, in particular by reducing the provision of free services and good to high-income groups.”
It was not the first time the IMF had the same or similar observations, but this was as if it was signalling it had reached some kind of consensus with Government.
The minister of finance, to his credit, had given notice earlier of the direction in which he would be moving when he addressed the Editorial Forum of the National Publishing Company Limited in March.
Acknowledging that Government’s cash flow was “still tight” he said it would continue to focus on tax reform this year “with major aims being efficiency in the collection as well as an equitable share of assessed incomes”.
So, while we can anticipate some cash for UWI and the QEH in the June 15 Budget, we should also expect some bloodletting via taxes at the personal level.
Albert Brandford is an independent political correspondent.