Kellman: Blame the high deficit on VAT
Wednesday, March 17th, 2010Low Value Added Tax (VAT) rates and a technologically driven society are partly to be blame for Barbados’ high deficit.
Member of Parliament for St. Lucy, Denis Kellman told the House of Assembly yesterday afternoon that he knew saying that VAT rates are too low was not going to be a popular statement, but one which he would make.
“What occurred was instead of Barbadians continuing to repair refrigerators, stereo sets and large appliances, the prices of those things dropped so low that we stopped repairing them and employing ourselves, but we started exporting jobs by buying new products,” he said.
Speaking during debate on the 2010/2011 Estimates of Revenue and Expenditure, he added that the same thing occurred with reconditioned cars, where instead of car owners repairing their vehicle, they bought a repaired (reconditioned) one instead.
“We ask ourselves why we are here. We are here because the last Government instituted policies to put work outside of Barbados and to introduce social problems for the country, and they felt that once they had enough money in the treasury that all they had to do was make was to make money to those available in the system,” Kellman charged.
He added that Barbados was no longer a working society. “There was a time when the strongest (avenue) for collecting taxation was through the worker,” Kellman said.
However, he drew reference to Cable and Wireless now LIME and the number of people once employed there compared with now.
“One wonders why we do not have the tax take that we use to have. But we don’t have the workers anymore. We have technology and the direct taxation cannot work the way it used to work because in those days you had man, but (with) the combination of technology and man, technology is exempt from many taxes, while the man used to play many taxes,” he explained.
This, he said would result in a shrinking of the revenue base…. You can only see a shrinking revenue base.
“We have to recognize that we are a consuming society. The strongest point about Barbados is that we are consumers. We consume everything. Whenever we consume, we are losing foreign exchange, and there must be a cost to that foreign exchange,” he cautioned.
Kellman suggested that Government needed to find ways to deter people from consuming foreign goods and to use local goods, and use taxation as a policy to better the country’s productive sector.
He further warned that Barbados needed to get away from deficit financing. (JRB) (Barbados Today)







The 26-year-old medium pacer, who finished the series with eight wickets, is now joint 20th in the rankings, his highest ever career ranking.