The opposition on Tuesday intensified calls for the government to honour its 2018 promise to cut the 17.5 per cent Value Added Tax rate, set almost 15 years ago, accusing officials of failing to act as rising living costs squeeze ordinary households.
As Parliament debated the Companies (Economic Substance) (Repeal) Bill and the Income Tax (Amendment) Bill, Opposition Leader Ralph Thorne raised concerns about taxation and spiralling prices, even as the government continues to boast of repeated quarterly economic growth.
He said: “Since we are on a debate dealing with taxation, I would ask the honourable member for Christ Church East Central [Ryan Straughn], who likes to take this Parliament on excursions of recent history and the honourable member said, during his presentation, that things are better now than they were in 2018 and I want to remind the honourable member that when this government came to office in 2018, and we were on the issue of taxation, that a pledge was made to the people of Barbados that VAT would be reduced from 17.5 per cent.”
Thorne described 17.5 per cent VAT – raised from 15 per cent in December 2010 as a temporary measure under the Freundel Stuart administration by the then-finance minister Chris Sinckler – as a direct hit on people’s pockets.
“Whether you’re rich or poor, anytime you purchase a commodity, whether goods or services, you must add 17.5 per cent. One, it is a disincentive. Two, it is a burden.”
The opposition leader added that while VAT may benefit the state’s coffers, the duty of any administration is to ease the load on taxpayers.
“Maybe it’s a benefit to government, but the economists will tell the government that the government has a responsibility as a good and caring government to remove burdens from people’s shoulders, and that is precisely why in 2018 the government made that promise,” Thorne said. “There comes a time when you must not only remove burdens, tax burdens from the shoulders of people, but you must put more money in the economy to generate an economy that is stagnating.”
He drew a clear link between lower taxes and ordinary Barbadians’ ability to breathe financially.
“The only way in which this country and the citizens of this country will find financial and economic freedom is if in the first place, VAT is reduced.”
Thorne pressed home his argument with a series of questions aimed directly at the government benches.
“Is 17.5 per cent reasonable at this point in time? Should it not be reduced at this point in time? Does it not offer not total but partial salvation to the people of this country?”
He then challenged the administration to say plainly whether it intends to act on its own promise, and to what extent.
“One of the primary ways of returning spending power to the poor people of this country and the not so poor and the middle class and the upper middle class, even, is to increase their spending power, and one of the means and the primary means of doing that is by reducing VAT from 17.5 per cent. I challenge this government at this juncture to tell the people of Barbados if it intends to reduce it and if it intends to reduce it, if it will renew an eight-year promise to say by how much it will reduce it.”
But Straughn, backing away from reducing the VAT, defended the government’s record.
“We have not been able to reduce the VAT as we have originally promised, but we had to deal with all them things… we still did not lose sight of the very people that he coming in here to claim he has all this concern for,” Straughn said, emphasising the government’s actions to stabilise the economy since taking office in 2018.
He highlighted the government’s approach to easing the financial burden on citizens.
“We have been incrementally ensuring that ordinary families in this country, Sir, can afford to be able to provide for their children and their families,” he stated.
He noted that any VAT reduction is a possibility in the future, while underscoring ongoing efforts to support citizens’ welfare: “And if that is a consideration for the future, then we will do so. But at the end of the day, until that day happens, I know that the people of this country will know through our records, that we didn’t wait until the magical moment to ensure that people can afford to live in this country. We have been doing it every single day,” Straughn said.
(LG)
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