The Democratic Labour Party (DLP) Government was swept into office with an emphatic mandate to deal with the cost of living. In fact, its inspirational leader, late Prime Minister David Thompson, listed cost of living as Priority No. 1, Priority No. 2 and Priority No. 3. However, since taking over the Government in January 2008, the DLP has seen the cost of living skyrocket while Government has imposed revenue-earning measures that have reduced taxpayers’ disposable income. Last Thursday Minister of Finance and Economic Affairs Chris Sinckler spoke with SATURDAY SUN Editor Sanka Price about how Government intends to ease the squeeze on Barbadians. The following is an edited version of that interview.
Q: Mr Minister, recent hikes in the price of commodities have created even greater concerns about the cost of living. Chicken, eggs, flour, bread products, imported vegetables and meats have all gone up in the last few weeks. Is Government aware of these hikes and what is your response to them?
Sinckler: Of course we are aware of them and they give us a feeling of “uncomfortableness”, for want of a better word. The situation externally has driven up commodities and oil prices. Fuel prices went up to a significant extent over the last two months and this has caused some concern for me, members of my team and the Government as well. We are monitoring the situation, as I indicated in the Estimates. We have a team looking at how we can produce some level of mitigation. As you know, it’s fairly difficult because of the fiscal situation that we are facing – the lingering effects of the global recession and our own domestic recession in terms of public finances. Therefore, whilst we feel the pain of average Barbadians, whatever actions we are able to produce in short order will have to be aligned with our effort to bring our economy back on track.
Q: Is the cost of living still Priority No. 1 and, if so, how can you convince the ordinary man in the street that the Government is definitely working and this is not just talk?
Sinckler: The best thing the Government can do to assist the man in the street is to ensure that we keep Barbados’ economy and the very fabric of this society stable and together. Don’t forget we have gone through a major global recession which has had an impact on Barbados, as it has impacted negatively on our major trading partners. Whilst one is discomforted by the situation in relation to prices and, indeed, cost of living is a major issue – we can’t run away from that – the average citizen is aware that much of what is happening now, as it was in 2008, is being driven by exogenous factors, most of which we have very little control over. It is not as easy as saying you can subsidize this and subsidize that because if you do those things without giving a holistic picture or analysis, you may be solving one problem but creating several others down the road that, in effect, may come back to hurt the very people you are trying to help the most.
Q: Realistically, what can Government do about this situation?
Sinckler: To be honest with you, there is very little that we can do in this circumstance. The previous Government, as you may remember, subsidized the fuel to the Light & Power to allow for the bill to be modulated in terms of price increases. But that was in a scenario in which the deficit as a percentage of the GDP (gross domestic product) was somewhere around two percentage points or less. We are dealing with a situation where you are having a deficit of just below or over seven per cent. Therefore, the crunch on public finances is much more acute than it was then. So we have very little elbow room to go in and do that kind of thing.
Q: That brings us to the Excise Tax on gas which you increased by 50 per cent. Why can’t Government cut this tax to ease prices at the pump?
Sinckler: In normal circumstances, it is something that should really be done and that Government would rush to do, but when we counter-balance that with what is happening in terms of the real facts before us, then we have to weigh the options and see. We are not totally ruling it out, but we have to proceed with caution because we want to ensure that we meet the targets, keep the economy stable, bring public finances under control and get our revenues back up. Yes, we did increase the Excise Tax by 50 per cent on gasoline, but you have to look at the entire spectrum collectively and see whether or not your revenue targets in total are being met. For example, (with) corporate taxation, revenues are down to a significant extent, over 11 per cent. You make up that shortfall by the extra that you may be getting somewhere else. So taking it in totality, you are still able to meet relatively your revenue targets, even though in one area there’s a decline and in another area there’s a little extra that you are picking up.
Q: Do you think the supermarkets can do better than what we are seeing on their shelves?
Sinckler: I’m not a supermarket owner and therefore I cannot say what their overheads are. I think in large measure some difference can be made. They would argue otherwise, but you would have to concede to them that, given what is happening internationally, it is very difficult because prices are increasing at such a rapid rate that it would eventually find its way in people’s pocketbooks and on their tables, in terms of food. We need though to examine in terms of the pricing structure in Barbados the tariff schedule; the rates being charged; whether items are being charged high duties in protection of things that are not even being produced in Barbados. That is one of the things that is going to come out in the Customs and Excise modernization project which we are currently doing in the Ministry of Finance. …
Q: When can Barbadians look forward to an ease to this squeeze?
Sinckler: To be honest with you, it is very difficult for me to give a specific date.What I can say is that the Government continues to look for ways. I have my team currently working to see how we can effect some adjustments to ensure that Barbadians can have an ease. But it is difficult to say a date. What I think people need to understand though is that when you have been in a recession as deep as we have been in, to the extent that the economy went down almost four per cent in 2009, it takes a little time before that can permeate through the system to go down to the micro level.
Q: What is your message for Barbadians?
Sinckler: My message for Barbadians is we are making progress; we are getting there. The economy is going in the right direction but we still have issues. We have not arrived at that place yet where we can safely say we’re out of the woods. Therefore, we would urge Barbadians to remain focused. Yes, it’s painful, but Government is going to walk with you through this process.
