[dropcap]I[/dropcap]n her first Budget address since her party’s recent 30-nil election victory Barbados Prime Minister and Minister of Finance Mia Mottley outlined what she termed her government’s “Economic Recovery and Transformation Plan”. The budget came mere days after an official visit by officials of the International Monetary Fund, after
which the IMF issued a statement that read in part: “Barbados is in a precarious economic situation. International reserves have dwindled to US$220 million, while central government debt is unsustainable. The fiscal deficit has decreased over the last few years but remains large, at about 4% of GDP in FY2017/18. In
the coming months, we expect to continue our close dialogue with the Barbados government, with the aim of reaching understandings on economic policies that could underpin an IMF supported program.”
The plan, Mottley says, will be carried out in three phases, with the first phase seeking to “reduce the fiscal deficit in the first year. The government’s detailed plan includes a 5% increase in salaries for public workers,
increased pay for pensioners, and the hiring of three temporary judges at a cost of $700,000 thanks to a backlog of ten thousand criminal cases.
Effective 1 October, Value Added Tax (VAT) will be charged on all online transactions (goods and services) in the country. Pointing out that a large number of Barbadians now engage in online transactions via Amazon, Ebay or Netflix, Mottley said, “The technology now exists for us to capture these transactions for the purpose of taxation.”
On 1 July, the road tax that was in the region of $400 to $1,600 per year will be no more. There will also be significant changes in income and corporation taxes, with a new rate of 40% on incomes greater than $75,001 and the highest corporation tax rising from 25% to 30%.
Some of the new taxes are similar to those imposed by the Saint Lucian government. Replacing the road tax will be a fuel tax. This new tax will be levied at a rate of 40 cents per litre of petrol, 40 cents per litre of diesel and five cents per litre of kerosene.
October will see the introduction of an Airline Travel & Tourism Development Fee. Passengers flying out of Caricom will pay US$70 and within Caricom US$35. This new fee will be added to their already established departure tax of US$27. 50.
Said Mottley: “For those who may be worried, may I remind persons that in Saint Lucia they raised their fee at the airport through similar taxes and, in spite of that, they saw not a reduction in travel but an 11% growth in tourism.” In a full fiscal year, the tax is anticipated to raise $95 million.
Prime Minister Mottley passionately challenged Barbadians to stand and proclaim with confidence that “Barbados is back! Our country needs us; it is now time for us to rally to the cause!”
On 13 June, Mia Mottley led a three-team delegation from Barbados to Washington, for further talks with the IMF.
