Arthur: Removing VAT part of a “political game”, cautions gov’t over fiscal adjustment

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Arthur: Removing VAT part of a “political game”, cautions gov’t over fiscal adjustment
Former Barbados PM Owen Arthur
Former Barbados PM Owen Arthur
Former Barbados PM Owen Arthur

Former Prime Minister Owen Arthur has advised the government to resist calls for an adjustment to the country’s tax base in a manner that can “induce further financial instability”.

Speaking at the ruling Saint Lucia Labour Party’s annual Conference of Delegates in Vieux Fort on Sunday, Dec. 6, Arthur added that calls for the abolition of the Value Added Tax (VAT) were part of “a political game and should be ignored”.

Arthur said “excessive use of punitive levels of taxation and draconian reduction of expenditure” would only lead to severe economic contraction. He made that statement while pointing to a recent international study of fiscal consolidation programmes proposed for the 187 countries.

“Indeed, if the 187 countries, including St. Lucia, proceed full blast with their programmes to correct their fiscal imbalances by compressing domestic demand, the study projects that the world can be thrown into a deep new turmoil of global recession between 2016 and 2020,” he said.

He noted that the projection made in the research done by the South Centre, Columbia University and the International Labour Organisation was for a loss of seven per cent of Global GDP and over 12 million job losses over the next five years.

Arthur therefore sees it as important for countries to seek to avert this pending disaster “by setting out to correct their fiscal problems more by inducing economic growth, and less by new punitive tax and expenditure reduction measures”.

“These calls are made to enable the Governments to be condemned for not doing that which in all wisdom and prudence cannot be done,” he cautioned.

Arthur also drew attention to a study published on September 15th by the Caribbean Development Bank, which is entitled Public Sector Debt in the Caribbean: An Agenda for Reduction and Sustainability.

He said it contains an in-depth evaluation of the root causes of the recent debt accumulation and presents some highly revealing insights, including the fact that “the largest recent contributors to debt have been the cost of off-budget events and activities.

“Among these are the operations of public enterprises which have badly impaired balance sheets,” Arthur said, adding that “the contingent debt associated therewith has become the primary source of new debt in the region.

The former prime minister warned that this was now a major problem, which had to be confronted not only in St Lucia but, especially Barbados, where he said nothing short of a $200 million adjustment has to be made to the funding and operation of such enterprises.

Arthur, while contending that integration was the best way forward for “broken” Caribbean economies and that Barbados was “the true Eastern Caribbean state”, also cautioned that fundamental issues related to the nature of governance, the political culture and the role of public enterprises will have to be addressed.

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13 COMMENTS

  1. Vat ensures that everyone makes a contribution to our treasury . In addition to vat, the size of government should be trimmed, and accountability in the public sector must be guaranteed or else....the boot.

    (0)(0)

  2. No wonder this Dinosaur couldnt work with Mia Mortley. His level of thinking is archaic and was not in line with the modern approach by Mia Mortley and her team hence the reason for him going independent. LOSER

    (8)(1)

  3. The only credibility the UWP has is with Sarah Flood.
    One set of fellows say she running a seat. Another say she supporting the party but not running with Chastanet.
    What does that tell you.

    (1)(3)

    • Joe how insightful, welcome to lala land, its the only place where you will find idiots who share you way of thinking.

      (0)(1)

  4. Even the most obtuse person now knows that the UWP led by a clueless Chastanet will go down in elections in 2016.
    Kenny is just chomping at the bits to call the date so he can get rid of Chastanet once and for all. Two polls to date have shown that.
    And then you UWPs just watch and see how fast Chastanet and his father dump you all! You will not be able to come within 100 metres of Coco Palm! Lol!

    The SLP have just begun their electioneering and alteady the UWP is sunk.

    Kenny til 2021!

    (42)(83)

  5. The problem Robert is not too many per se but the lack of productivity. There must b real public sector reform with an insistence on increasing productivity and accountability as obtains in the private sector. U not performing get out of the service voluntarily or be fired. That's how its done in the private sector
    but one can only dream....... Because as long as politicians main aim is to win the next elections they won't dare touch their boys and girls in the public service........... Look how this present pm backed off from taking the 5% cut that was already I. Their budget . Smfh.

    (9)(0)

  6. We're living in a "political game" society Arthur! I'm sure everyone knows what you're taking about but don't really care!!

    (19)(2)

    • Arthur is no bright star in the firmament any longer. He once was, as advisor to Tom Adams, and as PM himself of Barbados.

      Like Kenny, he fell into the trap of very short-term thinking by encouraging households to burden themselves with mortgage debt for a poorly-attended and consequently the very predictable disaster that was the hosting of the World Cup Cricket Tournament.

      Some of us in Saint Lucia will never forgive Kenny and the SLP for misleading us in yet one other of his classic and egregiously risible financial disasters. The Emperor has no clothes!

      Small wonder that most Saint Lucians did not want to touch another sporting event like the CommonPOVERTY Games here. The Bahamas, they have deep pockets and brains.

      Saint Lucian politicians, they have clever tricks but have only one kind of intelligence, which how to win elections. After that, the Devil may care!

      (6)(0)

  7. Mr. Owen is right. However like in St. Lucia there are too many civil servants. The 15% VAT should have been introduced with only 5% and then increasing it gradually. Too many failed infrastructure projects. The future for St. Lucia in the coming 10 year plus is very bleak.

    (66)(5)

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