Inflation Hits Hard as Bajans Disappointed by No VAT-Free Holiday: Government Urged to Find Consistent Relief

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By Ryan Walters

Many Bajans were left disappointed on Tuesday when the Ministry of Finance informed the country that they must “conduct their business with no expectation” of a VAT-free holiday.

There was much speculation and anticipation about a repeat of the VAT-free day which was in December last year. But this was expected. With prices at an all-time high and no permanent relief plan in place by the government, consumers are in need of any possible ease they can get.

They have been left exposed to bear the full brunt of the astronomical costs of every possible thing in this country.

Ironically, on the same day the government declared there would be no VAT-free holiday, a senior minister was in Parliament telling the Lower House that the said government “can no longer continue to shield consumers from the high costs of fuel”.

To date, every short-term measure, implemented by the Government, to ease consumers, is no more. The food prices and fuel deals that were made to supposedly benefit the consumers are currently non-existent.

An extension to the Social Compact was given a resounding no by all parties of the private sector’s key groups: the Barbados Chamber of Commerce and Industry and the Barbados Private Sector Association.

The ease in VAT on electricity bills will come to an end early next year. National Insurance contributions will also increase since the threshold for earning will increase on January 1, a mere 10 days away. God help us.

So while the government has played cat and mouse with the VAT-free holiday, maybe it is time for them to give serious consideration to other ways to cushion the harsh reality of the rising cost of living on a more consistent basis as Bajans have to buy groceries, pay bills and take care of their families all year round, not just at Christmas.

The cumulative rate of inflation since 2018 is mind-boggling, reaching around 22.6 per cent over the last five years to 2022. If you compare that to the previous five years between 2013 and 2017 which was around 9.5 per cent. One can only imagine how a householder’s spending power has dwindled. No wonder consumers are craving any ease that they can get.

On the contrary, based on how consumers are reacting, it appears that businesses have not absorbed any increases in cost and have passed them on to consumers, although they would have benefited from VAT write-offs, removal of the National Social Responsibility Levy (NSRL) and reductions in corporation taxes just to name a few.