New property tax system an ‘austerity measure’ – Eustace

The new property tax system slated for implementation here this year is an “austerity measure”, Opposition Leader Arnhim Eustace said on Monday.{{more}}

“When you hear me talk about the word austerity measure, it is a measure that brings hardship on the person in an effort to try and correct problems in the economy,” Eustace said on his weekly radio programme.

Eustace cited International Monetary Fund (IMF) figures in saying the Vincentian economy declined in 2011, for a fourth consecutive year.

But Prime Minister Dr Ralph Gonsalves said in May that the economy grew by 0.41 per cent last year, after three years of decline, and added that economists projected 1.5 per cent growth this year.

Eustace said the government wanted to begin basing property tax on the market, rather than rental value of properties worth more than $25,000, because of the nation’s fiscal situation.

The new tax could see property owners paying as much as 15 per cent more in taxes and exempting some who pay currently.

“The poor financial state of the government and its management of government finances that put us in this position that we have to try and raise revenue, create taxes.”

The former Minister of Finance under the New Democratic Party (NDP) said that the Dr Ralph Gonsalves-led Unity Labour Party used to laugh at the NDP, saying that it is balancing the national accounts.

“Well, they have to balance theirs now, so taxes come in,” Eustace said, adding that this is why the government has been unable to pay to teachers a 3 per cent salary increase since January 2011.

“All this talk we hear, … that is the reality,” Eustace said.

“And you don’t get economic growth just by cutting back and increasing taxes. You have to do something to stimulate those sectors of the economy — like agriculture and tourism — which can bring you revenue,” he said, adding that people must also be given “incentives”.

He blamed the “poor financial management of this government” for the nation’s fiscal problems.

“Everybody says it is the world economy. It’s not just the world economy. That plays its role. But you have to take decisions in your country that minimise the impact of the problems in the world economy.

“That is why some countries are growing and others are not growing. Because locally, we have not taken the decisions which take into account what is happening out there,” Eustace said.

He asked how the economy is going to grow with the current challenges facing the banana industry.

Local banana cultivation was ravaged by Black Sigatoka last year and farmers did not export any fruits to the United Kingdom for eight weeks this year.

“And you don’t even have a solid programme yet to deal with that,” Eustace said.

He quoted a Financial Times article that noted the high debt-to-GDP ratios in St Kitts and Nevis, Jamaica, and Barbados.

“Three other Caribbean nations, Grenada, Antigua and Barbuda and St Vincent and the Grenadines, are less indebted, but also struggling with shrinking economies,” the article said.

“The economy got smaller and smaller for four years in a row … and you have all this talk outside here aimed at fooling the public,” Eustace said, citing IMF figures.

“They are projecting that we will grow in 2012. But that was before all the banana problems. So, we will wait and see what happens in 2012,” he said of projections by the government.

“The Prime Minister, anybody else can talk what they want. None of them fooling me in anything to do with matters of this sort,” said Eustace, an economist.

“And you don’t have to be fooled. You can feel it in the place when you go around Kingstown. The amount of people expressing their concerns; the amount of businesses expressing their concern.

“And you have these spin doctors talking a lot of foolishness on the radio, things they don’t even understand themselves,” he said.

(kentonchance@searchlight.vc)