THE GOVERNMENT OF BARBADOS will officially repeal the controversial municipal solid waste tax when an amendment to the legislation which brought it into existence is passed by the Parliament. The House meets again in mid-June.
The amendment states that the act will expire on March 31, 2015, the original date given for its demise in Mr Sinckler’s August 2013 Budget speech, when the tax was one of several new fund-raising efforts announced by the government as part of what it called a fiscal adjustment programme.
Apart from its almost universal unpopularity among the public, the passage of the Municipal Solid Waste Tax brought about a major political event in the country: It firmly established official Opposition leader Mia Mottley’s power and at the same time reduced the influence of the former Barbados Labour Party leader Owen Arthur immensely.
This occurred when Ms Mottley, who called for the country to rally around her leadership in a protest march to Government headquarters on Bay Street, was able to lead a demonstration of several thousand people, many of them from the middle class, down Bay Street. Mr Arthur did not take part in the event.
That all happened almost a year ago. Today, the unnecessary little tax that upset everybody is apparently about to take its place in the annals of really bad political mistakes made by the Dolittle Administration. It will have to fight for a space on the shelf.
Over the 19-month programme, the measure was expected to bring in almost $150 million. However, according to the Central Bank of Barbados in its April news release, by the end of March it had brought in just under $36 million. The consolidation tax performed as expected ($42 million), but the tax on bank assets didn’t ($24 million instead of $38 million).
Those are the only ones shown separately in the central bank’s numbers: the rest are rolled into other taxes and are not visible.
But, overall, according to the central bank’s numbers, total tax revenue fell by $85 million in fiscal 2014 over 2013, and then it increased by almost $150 million in 2015 over 2014. But about half of that increase was from personal (income) tax alone, and did not include the consolidation tax.
If you add the remaining half of the increase to the $85 million shortfall in revenue from the previous year you get a pretty good picture of how much additional overall revenue the adjustment programme brought in – something like zero. While he is at the work of repealing the solid waste tax, the finance minister could do the country a favour by getting rid of the extra taxes in that stabilisation programme, as well as the new tipping fee.
We are a country trying to regain momentum we lost initially from the global financial crash of 2008. But instead of introducing incentives like the deal it gave Sandals and is now belatedly giving the other hoteliers, the government simply borrowed billions in order to retain the status quo for as long as possible. We are paying the price now.
An economy runs on momentum based on confidence, and if it slows down for too long the very tax revenue the government needs to pay its bills starts to dry up.
Mr Sinckler, having tried almost every tax he could come up with, now has no choice but to change course.
Patrick Hoyos is a journalist and publisher specialising in business.
