Inflation Hits Hard as Bajans Disappointed by No VAT-Free Holiday: Government Urged to Find Consistent Relief

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By Ryan Walters

Many Bajans were left disappointed on Tuesday when the Ministry of Finance informed the country that they must “conduct their business with no expectation” of a VAT-free holiday.

There was much speculation and anticipation about a repeat of the VAT-free day which was in December last year. But this was expected. With prices at an all-time high and no permanent relief plan in place by the government, consumers are in need of any possible ease they can get.

They have been left exposed to bear the full brunt of the astronomical costs of every possible thing in this country.

Ironically, on the same day the government declared there would be no VAT-free holiday, a senior minister was in Parliament telling the Lower House that the said government “can no longer continue to shield consumers from the high costs of fuel”.

To date, every short-term measure, implemented by the Government, to ease consumers, is no more. The food prices and fuel deals that were made to supposedly benefit the consumers are currently non-existent.

An extension to the Social Compact was given a resounding no by all parties of the private sector’s key groups: the Barbados Chamber of Commerce and Industry and the Barbados Private Sector Association.

The ease in VAT on electricity bills will come to an end early next year. National Insurance contributions will also increase since the threshold for earning will increase on January 1, a mere 10 days away. God help us.

So while the government has played cat and mouse with the VAT-free holiday, maybe it is time for them to give serious consideration to other ways to cushion the harsh reality of the rising cost of living on a more consistent basis as Bajans have to buy groceries, pay bills and take care of their families all year round, not just at Christmas.

The cumulative rate of inflation since 2018 is mind-boggling, reaching around 22.6 per cent over the last five years to 2022. If you compare that to the previous five years between 2013 and 2017 which was around 9.5 per cent. One can only imagine how a householder’s spending power has dwindled. No wonder consumers are craving any ease that they can get.

On the contrary, based on how consumers are reacting, it appears that businesses have not absorbed any increases in cost and have passed them on to consumers, although they would have benefited from VAT write-offs, removal of the National Social Responsibility Levy (NSRL) and reductions in corporation taxes just to name a few.

The government has joined the private sector to continue to inflict the pain that taxpayers are feeling day in and day out. The government imposed a slew of taxes on households and consumers, namely the garbage levy, sewage tax, fuel tax and health tax. And in recent times, government officials have boasted about earning more in tax revenue off the backs of Bajans, which is a direct result of taxing consumers on increasing prices on the shelves.

With all this going on, rather than putting long-term measures in place, they figure that they can run the economy on three and six-month initiatives, that keep Bajans holding their breath every few months.

I speak specifically to their campaign promise of 2018 to lower the Value Added Tax rate if elected to government. Amidst spiralling inflation and increased revenues – based on the same inflation – they have not ventured to fulfil that promise to the people. Something, mind you, that could ease consumers and give them some breathing space.

Additionally, we always purport that all we have is our people and that without natural resources our people have carried this country by being productive, hard-working, tax-paying citizens. But to what end?

How are we encouraging our workers to put in the extra effort, to work that extra hour, to come in on that off day when every extra dollar they earn is taxed to thine kingdom come?

Why does this caring government continue to dip their hands in the extra week or two that your employer rewards you with once a year? Why is it that those employees who are so blessed to have an annual bonus from their company lose almost a quarter of it to government taxes?

Clearly, the government must know that they can improve productivity while countering the high cost of living if they allow workers to take home more money.

There is still an outstanding challenge that the country has which is a non-existing fixed minimum wage.

What we have is a minimum wage rate, but employers enjoy the flexibility to tell you what you can and can’t earn on a weekly basis. It is time to do like some of our neighbouring Caribbean countries and mandate a standard set of hours a week so that we can finally get a minimum wage in this country.

The government can and should do better on behalf of the people of this country. Slogans and catchphrases alone are not cutting it. Furthermore, in the words of a popular leader: “Cut it out.”

Ryan Walters is a member of the Democratic Labour Party.