VAT still big earner for Bdos govt
While other Caribbean countries grapple with internal conflicts over whether or not to implement Value Added Tax (VAT) regimes, the Barbados government reaped almost a billion Barbados dollars in VAT receipts last year.
According to the economic review of the first six months of 2012 released by the Central Bank of Barbados on Monday, provisional estimates for the 2011-2012 fiscal year are that VAT brought in BDS$949.6 million dollars into the Treasury.
On a whole, VAT contributed BDS$764.8 million of the BDS$1.2 billion in indirect taxes taken in by government last year.
And, despite the still precarious economic status of the island, it appears on track to add even more revenue to government's coffers this year as the central bank is reporting that an estimated BDS$243.9 million in VAT receipts has been taken in up to June this year versus BDS$227.8 million over the same period in 2011.
In fact, VAT receipts have been credited for giving the entire government revenue a much needed bump.
"Government's total revenue is projected to have improved by 3.4 per cent, compared to the same period last year, primarily owing to a seven per cent increase in VAT receipts. On the other hand, personal tax collections were down by 5 per cent, while corporate tax receipts fell by four per cent. Expenditure on interest payments grew by five per cent and pensions and other transfers to individuals and to public corporations rose by 20 per cent and 12 per cent, respectively," stated the central bank report.
This gain in VAT revenues prompted the Barbados government to retain its 2.5 per cent increase on the VAT rate implemented almost two years ago until further notice according to Minister of Finance Christopher Sinckler in his recent national budget presentation.
However, the Barbados economic picture is not looking as rosy on all fronts. The economic review reported that real growth in the first half of this year was estimated at only 0.6 percent.
Also, Barbados foreign exchange reserves at the end of June stood at $1,357 million, marking a decline of $63 million since December 2011.
The central bank attributed this to the fact that the international recession has slowed the inflows of foreign exchange to Barbados, and has therefore limited the prospects for growth in an economy which needs foreign exchange in order to register sustainable growth.
Output in the tourism sector is estimated to have risen 1.8 per cent in the first half of the year. The largest increase came from the CARICOM area, particularly Trinidad and Tobago, where arrivals grew by 35 per cent, according to the report.
The once booming construction industry appears to be staging a moderate revival, growing by a reported 1.3 percent due to private commercial building activity, the continuation of tourism-related projects, and public sector capital projects.
The number of active companies in the international business and financial services sector increased by three per cent, stated the report.
Inflation appears to have decelerated slightly, with the projected 12-month average rate to June at about 8.6 per cent, compared to 9.5 per cent in December.
Inflation in the prices of food and fuel appears to have abated, since the last quarter of 2011.
Unemployment continued to inch up as, in addition to the job loss in tourism, there was also some retrenchment in the manufacturing sector and non-sugar agriculture, resulting in an unemployment rate estimated at 11.8 per cent at the end of March 2012, compared with an average of 11.2 per cent for all of 2011.