The Barbados Government still relies heavily on six major taxes for about 80 per cent of all the revenue it receives in taxes and fees and grants, just as it has done since the days of the Owen Arthur administration, according to figures compiled by your humble reporter.
These figures have been sourced from the Estimates publication released every year by the Government, and updated with the Central Bank of Barbados’ figures wherever they differ, which is hardly ever.
The figures show that, despite an increase in value added tax (VAT) from 15 per cent to 17.5 per cent five years ago, and despite the removal of allowances on personal income taxes and increases in property taxes, those so-called “Big Six” taxes have brought in between 80 per cent and 82 per cent of all Government revenues every year since the last year of the Arthur administration, which is as far back as we went, with two exceptions.
Those exceptions were the year 2014-15, when they fell to 78.4 per cent, and the year now ending, 2016-17, when they totalled 84.5 per cent, but would have reached almost 88 per cent were it not for the Government booking extraordinary revenue for the year totalling around $100 million.
For the coming fiscal year the Big Six are expected to bring in around 82 per cent again, but would hit 85.4 per cent if another $100 million in extraordinary revenue were not added in.
According to the Estimates of Revenue and Expenditure for the coming financial year 2017-18, which were laid in the House of Assembly last Monday, March 13, the Government seems to be relying heavily on a few extraordinary items to help it reduce its deficit for the year now ending and the new one set to start on April 1. These items added $102 million to the current fiscal year’s revenue, and will add another $100 million in the coming year, and appear to be related mainly to the sale of the Barbados National Terminal Co. Ltd.
The Big Six taxes are corporation tax, income tax, property or land tax, VAT, excise taxes and import duties.
The biggest of these is, of course, VAT, which jumped from three-quarters of a billion dollars in fiscal 2011 to $940 million in fiscal 2012, the first full year of its increase to 17.5 per cent from 15 per cent. After that big year, VAT receipts fell back, but in fiscal 2015-2016 they made a comeback, reaching $924 million, and for the year now ending, fiscal 2016-2017, they have reached close to $950 million. The VAT supplies around one-third on average of all Government revenues every year.
Income tax revenue has also been growing steadily, with the Government estimating it will receive $493 million during the 2016-17 fiscal year. That’s well above the $375 million it brought in during the last year of the Arthur administration.
With the loss of a lot of revenue from the international business sector, corporation tax fell during the early years of the Stuart administration, well down from the almost $450 million it brought in back in 2008-09, Arthur’s last fiscal year in office. For fiscal 2014-15 it only brought in $156 million, but has since rebounded to $241 million for the financial year now coming to a close.
Land tax revenues have also been growing steadily of late, bringing in $187 million at the end of the last fiscal year, but falling slightly to $175 million for the year now ending. Similarly, excise taxes, perhaps due to the continuation of the cess on fuel, have been growing, bringing $234 million for the current fiscal year, after slumping to $115 million three years ago.
And the last of the Big Six taxes, as I like to call them, import duties, have also been showing steady growth, reaching nearly $250 million this fiscal year, after languishing in the $200 million area during the first years of the present administration.
Together, these six taxes brought in $2.33 billion, or almost 85 per cent, of the nearly $2.76 billion in taxes and non-tax revenues reaching the Treasury in the fiscal year which ends on March 31.
In the coming year they are expected to produce an additional $50 million, according to the Estimates, reaching $2.38 billion, or almost 83 per cent, of the almost $3 billion which the Government estimates it will take in for the coming fiscal year.
Noteworthy:
Just a quick note to the authorities: just a note to say that the printer’s devil seems to have struck with my copy of the Estimates, which the Barbados Government Information Service kindly kept for me last week. Where you would normally find Table 8 is just a big blank page.
Having been around printing my whole working life, I know these things can happen, and I am sure (am I, though?) that all of the other copies have their Table 8 page. Funny thing, though, that Table 8 tells you where the Government is going to get the money to finance all of its spending over and above revenue from taxes and fees and grants.
Co-incidentally, that whole question also saw the demise of a Central Bank governor. I miss the table, but may not be able to say the same for the governor.