Business
No major surprises in budget presentation
Barbados Minister of Finance Christopher Sinckler (pictured), delivered no major surprises in his second budget presentation, coming only nine months since the first in November, 2010. The budget was presented against a backdrop of a recent downgrade of Barbados’ credit rating by Moody’s, gross domestic product (GDP) growth of 2.1 per cent (as reported by the Central Bank) and high debt and deficit levels.
The assessment of the Institute of Chartered Accountants of Barbados (ICAB) is that the budget featured no new taxes and included some measures to stimulate the productive sectors, but appeared to defer major measures to tackle the fiscal deficit.
It is ICAB’s view that there was no scope for increased taxation in this Budget, given the increases in Value Added Tax (VAT), licence fees, excise taxes and income taxes imposed in the last two budgets.
We therefore agree with the decision of the Minister of Finance to offset the impact of the increase in land tax valuations by adjusting the bands in such a manner as would maintain the same quantum of land tax collected previously. Failure to make this adjustment would have resulted in a major increase in taxation on already heavily burdened taxpayers.
The minister stated in the budget that there is an urgent need to reduce the fiscal deficit. ICAB fully supports this position. The strategy outlined in the budget to achieve the revised fiscal deficit of $461.9 million or 5.2 per cent of GDP includes containing personal emoluments costs, reducing spending on goods and services, better project management and cuts and caps on transfers to statutory boards.
The statutory boards will borrow US$55 million from the National Insurance Board to finance their programmes. ICAB is of the view that this does not constitute expenditure cutting but rather expenditure shifting. Additionally, the use of borrowing from the National Insurance Board to finance Government expenditure will lead to an increase in debt. The minister announced that this programme will be for next year but no indication was given of what will happen in the following year.
With respect to revenue measures, the Minister announced several measures to improve the administration of the tax system and to ensure that all taxpayers make their fair contribution. The extension of the amnesty programme provides an opportunity for taxpayers to regularize their tax status without penalties or interest.
