Barbados: Finance Minister presents US$1.65 billion tax free budget

BRIDGETOWN, Barbados, CMC – The Barbados government Tuesday unveiled a BDS$3.3 billion (US$1.65 billion) tax free budget to Parliament, but stopped short of rolling back stringent economic measures introduced in the November 2010 fiscal package.



Finance Minister Chris Sinckler however outlined a reduction in the property tax and incentives for the business and tourism sectors.



The Finance Minister also announced some measures to ease the strain on Barbadian households these include adjusting the land tax band on residential properties by BDS$40,000 (US$20,000).



"I therefore proposed that effective this tax year, the existing tax bans should be adjusted while maintaining the current rate structure to allow the parity to be maintained with the aggregate taxes payable for the tax year 2010/2011.”



He said the new rates will be done as follows: “for residential property at present the first BDS$150, 000, (US$75,000) is exempted from tax. We propose to raise that to BDS$190, 000(US$95,000). That of course will mean that an additional set of people will now not be paying taxes".



But Sinckler said that the government would get tough on people who refuse to pay taxes.



"It is also proposed that effective tax year 2011, the late filing fee will be increased from BDS$100 (US$50) to BDS$500(US$250).



“We are doing this measure not as a revenue generating measure or for that purpose but to increase the level of compliance with the income tax act with respect to filing whether or not a tax refund is due".



Sinckler said the Barbados economy is expected to grow between 2 to 2.5 per cent this year.



“This increase is based on the apparent recovery in tourism over the last year. The industry is expected to grow in real terms in excess of three per cent” he said.



Sinckler admitted that the 2.5 per cent hike in the Value Added Tax (VAT); a 50 per cent increase in the excise tax on gasoline, as well as a rise in bus fares outlined in last year’s budget were “burdensome for most and perhaps painful for some” but he insisted that the government’s plan has been yielding positive results.



“Clearly Mr. Speaker, from the outcome of the first six months of this year and in particular for the first quarter of the financial year, that effort appears to be bearing fruit. Revenues are stabilizing and growing over last year, expenditures behind most stringent inputs from the Ministry of Finance are beginning to come down, “Sinckler told legislators.



He was critical of those who had who had been critical of the economic policies of the Fruendel Stuart administration, suggesting the recovery was in fact sound.



“Indeed Sir, this performance which we expect to continue to improve, is as good as or better than the earlier recovery years of any previous recession which we have encountered in this country in the last thirty years.”



Despite Sinckler’s report that the economy was finally turning the corner from the punishing global recession, he stressed that the government could not afford to remove the measures.



“But the economic cold is not gone yet and while some symptoms are clearing, the deeply embedded are still lingering and a discontinuation of the medication after only a relatively short period of time would be a grave mistake.”



He said that Barbados must be “firm, focused and forward looking” if it is to entrench the gains it has already made.