ONLY KELLMANOMICS
Monday, September 28th, 2009KERRIE SYMMONDS’ COLOUMN
Weekend Nation ( 22/11/02)
Apparently unable to sustain his own effort at writing a column, Democratic Labour Party Senator Clyde Mascoll has retreated from print media.
It is nevertheless good t o see that the intellectual base of the party has not died, but lives on in the writings of the “Honourable Member of Parliament for St. Lucy”. In last Friday’s Edition of the Barbados Advocate the public was treated to a lesson in what one would only call Kellmanomics.
Mr. Kellman outlined his recipe for success for the Barbadian economy, a critical ingredient of which was “a shift from direct to indirect taxation so as to increase production.” Were they on speaking terms, Senator Mascoll might have explained to Mr. Kellman that an entity’s ability to produce cannot, as Mr. Kellman seems to believe, be solely dependent on any particular method of tax collection.
This is especially obvious in the cases of some sectors such as agriculture which enjoy considerable tax relief but do not boast commensurate levels of production. Production capacity must also be a function of efficiency within the particular sector or company.
This efficiency is determined by issues such as availability and utilization of a suitable trained work force, the use of new production techniques and the implementation of more cost effective management systems, to name a few.
In addition, Mr. Kellman seems oblivious to the regional and international trading climate where increasing emphasis has been placed on direct taxes and low across- the -board tax rates which better facilitate trading activity.
At the level of the World Trade Organisation (WTO), to which the DLP Government joined us in April 1994, countries have had to give certain commitments that they would embark on this shift to direct taxation.
Moreover, some of the decisions made by the WTO’s Dispute Settlement Body seem to suggest that governments can in fact be accused, found guilty and penalized for having tax regimes which are inhibitive to free trade.
Even within the Caribbean Single Market and Economy member governments have undertaken to arrive at a harmonized tax system so as to allow CARICOM based businesses to compete more effectively, while at the same time creating an attractive investment climate.
It was nonetheless comforting to note that Mr. Kellman has finally come around to the idea that we need to attract foreign investment since only a short while ago he was insisting that we should be encouraging domestic investment.
However, this author fails to see how this will be done if our tax policy is at variance with the rest of the world and totally uncompetitive and restrictive to trade.
Lesson two in the course of Kellmanomics sought to offer excuses for the severe hemorrhages in our economy during the early 1990s. In this vein, Mr. Kellman observed that in times of recession, “The new Money Laundering Act should have the effect of restricting capital flight, a safeguard not in place during the period of the 1990s.
Mr. Kellman has not been more absurd since his claim that the amended Tenantries Act was the cause of a number of house fires. The Barbados Government passed the Exchange Control Act in 1967 and this Act has been administered by the Central Bank of Barbados since its establishment in 1972.
In principle, this Act allows individuals to convert the equivalent of US$3 750 per year without special permission if they are travelling outside the country by merely applying to a local bank. Amounts in excess of US$3 750 may be obtained upon application to the Central Bank.
Profits and capital from foreign direct investment may be repatriated if the investment was registered with the Bank at the time the investment was made. The flow of capital from Barbados has always been regulated.
The Central Bank also limits or delays conversion depending on the level of international reserves under the Bank’s control. Capital flight cannot be blamed for the 1990s crisis.
Indeed it is doubtful whether the issue arises at all. In similar vein, Mr. Kellman would wish to attribute the crisis to confrontational unions rather than deal squarely with the issues of fiscal imprudence, administrative discohesion and failure to inspire private sector confidence.
The new found Kellmanomics is yet another way in which those in George Street now attempt to distort reality and avoid taking responsibility for their own actions.



“To get the money, the UPP will have to widen Personal Income Tax (PIT); expand the government sales tax; increase company tax and property tax; and sell off state assets such as the port, APUA and the airport,” Bird stated.