Barbados: Prime Minister Mia Mottley Outlines Measures to Clear Debt Burden, Widens Protections for at Risk Groups

Recently-elected Barbadian Prime Minister Mia Mottley announced Monday that her government would re-establish the country's tuition-free tertiary education policy, increase pensions for retirees, scrap controversial taxes and grant salary increases to public employees.

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Several of the measures, which are scheduled to take effect on July 1, were among the promises made in the Barbados Labour Party's election manifesto. Also on July 1, the 10 percent National Social Responsibility Levy, or NSRL, as well as the country's Road Tax will be removed. Pensioners will also receive an increase in the minimum non-contributory pension from USD$77.50 to USD$112.50 per week.

“Protection of our pensioners will cost approximately $18 million,” Mottley told Parliament as she presented her administration's first budget themed ‘All Aboard – For Love Of Country.’ 

She also announced that public servants would receive a five percent pay increase between April 1, 2018, to March 31, 2019, and that her administration would resume paying tuition fees for Barbadians pursuing undergraduate study programs at the University of the West Indies.

However, despite living up to several of her party's campaign promises and being in office for just two weeks, Mottley has also imposed a series of new taxes and other measures as part of a USD$600 million plan to rescue the country's frailing economy.

Mottley said the three-phase Economic Recovery and Transformation Plan – which emerged from discussions with the Social Partnership in her first week in office following the BLP’s whitewash in the May 24 polls – would require the burden be shared by all Barbadians, according to Caribbean 360. She, however, promised the vulnerable would be protected.

A new fuel tax, at a rate of 40 cents per liter of petrol and diesel, and five percent on kerosene has also been implemented.

A Garbage and Sewage Contribution, at a rate of USD$0.75 per private household, will be introduced as of Aug. 1. Commercial premises will be charged 50 percent more of their current water bills.

As of Oct. 1, a Health Service Contribution, at a total rate of 2.5 percent on income, will be imposed on workers and businesses. Employers will be responsible for paying 1.5 percent of the total, while employees will be required to pay one percent.

A new, higher income tax rate band of 40 percent will be implemented as of July 1. It will be paid by those who earn an annual income above USD$37,500.

Staying at hotels and other accommodations in Barbados, as well as traveling from the country to any destination outside of the Caribbean Community (Caricom) will become more expensive. As of Oct. 1, a new Airline Travel and Tourism development tax amounting to USD$70 will be imposed.

Searching for equilibrium between fulfilling campaign promises and the introduction of new taxes, Mottley said, “We will take care of your children’s education, the emergency and basic healthcare needs of your family, your roads, gullies and beaches, your safety, and your public health. We cannot do everything else on our own. We need all Barbadians aboard, for love of country. Just as our grandparents and great-grandparents faced great trials and tribulations and rose above them, so too shall we. We will do it together.”