The Barbados/Grenada scenarios

As this is the final issue of the THE NEW TODAY newspaper for 2013, our Management and Staff take this opportunity to wish each and everyone a God-filled and blessed Christmas.

It is extremely difficult for us to extend the usual best wishes for a Bright and Prosperous New Year given the current state of things in the country.

However, we wish to thank our many readers and advertisers and vendors in particular for their support in the past 12 months and assure them that THE NEW TODAY is ready to be of assistance once again in 2014.

It is no secret that the political leaders now in charge of our nation’s affairs have quite rightly been telling us that the time has come for us to make some painful sacrifices to deal with a severe economic and financial crisis facing Grenada.

Our Prime Minister and Minister of Finance, Dr. Keith Mitchell has openly admitted that he feels “boxed in” and is not happy to do many of the things that he is doing right now in order to grapple with the problems.

Known as an anti-income tax person, Dr. Mitchell has been forced to eat his words and raise the threshold on the tax and bring in more persons into the net as he seeks to raise revenue for a cash-strapped government.

In addition, the normally pro-government Grenada Hotel & Tourism Association (GHTA) has objected to the imposition of the $5US per night levy on stay-over visitors to the island that government says is needed to help finance the marketing efforts of the newly created Grenada Tourism Authority (GTA).

The hotel association has made a public pronouncement that it was not consulted on the new tax and was taken aback by its announcement in the budget by the Prime Minister.

Two weeks ago, THE NEW TODAY had made mention of the levy in an article based on the draft Letter of Intent as prepared by the Ministry of Finance for presentation to the Cabinet of Ministers for perusal before it is finalised for sending off for approval from the International Monetary Fund (IMF).

In addition, PS Finance, Timothy Antoine did allude to the levy at a forum of the Civil Society Grouping held at the national stadium at Queen’s Park at which the GHTA President, Ian Da Breo was present and was one of the panelists.

This newspaper would hate to think that Mr. Da Breo had fallen asleep or was not paying much attention to the address of Mr. Antoine as he outlined most of the measures the government was seeking to embark upon as part of the Structural Adjustment Programme (SAP).

It was the duty of Mr. Da Breo to brief his membership on the US$5 tax and to raise their objections before Budget Day on December 10.




Since then, Senator Simon Stiell has stated publicly that if the tax is creating a problem for the hoteliers then there is a strong possibility that the government would not proceed with it.

However, the dilemma for the Mitchell administration is that it would have to look at other revenue earning measures in order to make back what is is giving up to hoteliers.

The government would have to demonstrate in a practical manner to the IMF in order to get funding for many of its projects that it is effectively implementing the things that are promised in the Letter of Intent.

This head tax on stay-over visitors at our hotels is a very sensitive issue because on one hand the government might be inclined to bow to the demands of hoteliers but keep insisting on the British government to rethink the controversial Air Passenger Duty (APD) on passengers flying out of British airports.

Why would the British take us seriously when we are thinking of imposing a stay-over tax for air passengers but want them to do away with theirs which the British government sees more along the lines of a revenue earning measure for the government in London?

As the country prepares to end 2013 and move into a new year, it is the view of THE NEW TODAY that the biggest issue for the government in 2014 and the foreseeable future remains the huge monthly payroll for civil servants.

The policy of attrition as announced in the Budget would not make any serious impact on significantly lowering the wage bill.

The government in nearby Barbados is faced with a similar situation and was forced to eat its own words that civil servants will not be sent home by announcing last week that 3, 000 employees in both the civil service and statutory bodies would be out of their jobs between January and March.

Several economists in Barbados are predicting that much more of the 16, 000 plus civil servants on the payroll in Barbados would have to be sent home by the Frundel Stuart administration in order to create the right balance between the level of revenue and expenditure and to arrest the serious financial situation facing the government there.

Credit must be given to our own local boy, Dr. Brian Francis, now a senior lecturer in Economics at the Cave Hill Campus of the University of the West Indies in Barbados who had correctly predicted that Barbados would have to move along the road of massive retrenchment in order to try and arrest the precarious situation facing the government in Bridgetown.

THE NEW TODAY subscribes to the views expressed by Dr. Francis that a similar fate awaits Grenada and the Mitchell government in the not too distance future.

2014 would certainly prove who is right – Dr. Francis or the Keith Mitchell/Timothy Antoine combination in the Ministry of Finance.

 

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