Haynes not sold on tax reduction

Central Bank Governor Cleviston Haynes is not confident that Government can afford to cut taxes.

He identified Government’s stretched finances and limited ability to borrow as the major obstacles to doing so now when Barbadians are faced with a higher cost of living.

This included an abandonment of the two per cent foreign exchange in place since 2017, but which the International Monetary Fund’s (IMF) staff mission for Barbados has urged the Mia Mottley administration to consider removing.

Speaking last Thursday during his institution’s latest Caribbean Economic Forum on the topic How Can Caribbean Central Banks Fight Inflation?, Haynes said there was need to “recognise that our governments generally, especially coming out of COVID-19, have limited fiscal space and in some cases very limited borrowing capacity”.

“Because once we talk about reducing the taxes we also have to look therefore at the deficits that may ensue and those deficits have to be financed. So we have to take an overall macroeconomic perspective,” he explained.

“It’s easy for us to look to think that the solution is for us to reduce taxes whether on income or on goods but we have to look to see what the impact is going to be on the fiscal [situation].” (SC)

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