Good afternoon, fellow Barbadians.
I address you this afternoon as we face a world that is characterized by a level of uncertainty like nothing that we have experienced in recent decades.
This uncertainty started in earnest with the advent of the COVID 19 pandemic, but today has escalated with a whole host of challenges that have been spurred by the war in Ukraine.
There is no doubt that many Barbadian households are facing unprecedented pressure not of their own, not created by our government or our private sector or our manufacturers, or indeed our shopkeepers or farmers, but by individuals and corporate entities and countries, governments over which we have little influence — in fact, no influence.
We certainly did not contribute in any way to the Russian invasion of Ukraine, but we are feeling the effects.
We did not create the factors that have spurred the global warming that we are facing and the climate crisis, but we are definitely feeling the effects.
We do not produce or consume enough oil and gas or other energy products to influence the supply and demand chains, but we suffer the effects of prices that we can hardly bear.
Our requirements of grain, fodder and fertilizer are so small when juxtaposed against what the world consumes that we are considered insignificant in the eyes of the players.
These, my friends, are the reality of our situation today. We sit as a dot on the globe with too little power to even say to the giants of this world, “Look, we here!” So instead, each day we devote a high percentage of our time, our energy, and our intellectual capacity looking for new ways to cushion the shock on our nation and indeed to shield you, our people.
And this brings us to the conversation that I want to have with you this afternoon, one in a series of conversations this month. I have not come here to scare anyone, and I think all of you know that. But I always do talk straight, and I like straight talk and talking straight to you.
You know as well as I do that things are not easy. But similarly, we all know that we are an island surrounded by water, and we all know, therefore, that in the ocean, when the sea gets rough, it’s time not for fancy strokes or the time for no butterfly, no backstroke, not even freestyle. Because when the water is rough, you have to survive. And to survive you have to tread water or, as we would say, even have the dog paddle.
Let me be very clear when I speak of intense discussions in the last week, in particular. We met as a social partnership on Friday to try and review some of the matters that we had looked on to have Ambassador Mascoll deal with. And we also met recently, over 9 hours and 4 hours over the last two days and over the last six weeks we met with the pig farmers, the poultry farmers, the vegetable farmers. And we’ve also met, as I said, in the last two days with retailers, distributors, supermarket owners.
As I indicated at the start, we recognized from early that there would be no knight in shining armor coming to rescue us, coming to the rescue Barbados. We understand that our survival rests in our own hands and that if we are going to feed ourselves through this crisis and beyond, we would have to create the environment to support our farmers.
Indeed, I think almost every week this year I have literally spoken to this country, to Barbadians, about the need for us to ensure we have food security. And we have spent a significant amount of time with our partners in the region as well, trying to ensure that we can boost production during the course of this year.
We appreciate as well that if each household can supplement its own supply, as I have said to you before, by planting a few heads of lettuce or cabbage or some carrots, growing some spinach, christophene or beans on the fence or your paling or keeping two rabbits or a black sheep or a goat or even a few yard fowls in your backyard. It could make a huge difference to families being able to cope in this country.
And therefore, why has there been all of this discussion, this soul searching, and what has been the result of it?
Well, let me speak to you directly. Today, I’m announcing for your benefit a series of measures that will kick in in the coming days or weeks and indeed, Minister Ryan Straughn will address some of them in Parliament in a ministerial statement on Tuesday morning so as to ensure that those things that require the force of law will have that benefit by reason of his statement to Parliament and the Provisional Collection of Taxes Act applying.
Let me start with the initial outline of the initiatives.
- We are now about to go into the summer vacation. The Ministry of Education, Technical and Vocational Training recognizes the critical role played by the School Meals Department in these challenging times, and that they must continue to provide lunches for our children, therefore, throughout the summer holiday.
- The Ministry of Finance will also offer relief for our householders’ electricity bills by ensuring that we reduce the value added tax from 17.5% to 7.5% for the electricity chargeed up for the first 250 kilowatt hours of everyone’s residential electricity bill.
- The Ministry of Finance, through the Customs and Excise Department will expand a list of essential food items, which I will announce shortly on which no VAT will be charged and a few on which no duties will be charged.
- Fourthly, we have also concluded the compact that they will go into in detail shortly, that will be signed on Saturday morning with the private sector. That will lead to the reduction of prices on 45 key items for a period of six months from the 21st of July of this year, next Thursday, to the 31st of January 2022.
My friends, let us address the details with respect to the school meals. We all know that parents go through a rough time, especially when children come off on holiday. Many of you are working. Those of you who are not working have now to take care and ensure that kids are well fed. And we all know what children can be like when they run about in the summer and really are in need of sustenance.
We are appreciative of the fact that the school meals department in this country relieves the burden off of tens of thousands of Barbadian families from having to feed their children lunch. And therefore, this is as Bajan as anything else that we do, since it has been a standard feature of our of our country from the beginning.
We therefore intend to ensure that every child of school age in this country will be given an opportunity between the 25th of July and the 2nd of September to continue to benefit from school meals in Barbados. We believe that this is a critical component in ensuring that our schoolchildren can have nutritious meals, while at the same time relieving the burden from our families from being able to move in a position where they do not have to buy additional groceries to ensure that their children can be fed during this period of time.
My dear friends, I also then want to address the issue of electricity. The reality is that we have come to a position in Barbados where electricity can no longer be viewed … as something that we can ignore given the increase in fuel oil prices, which we have no control over.
The bottom line is that those prices, as I indicated, from the top, are controlled by countries. And we now see that President Biden is visiting the Middle East to see what can be done to be able to ease the pressure off of people. The reality is for us, however, we have control over the value added tax. Earlier this year, my government introduced a number of measures that would have led to a caping of the value added tax with respect to fuel at the price of 80 USD a barrel. And we have seen the price of oil go as high as over 125 USD a barrel and that has not been passed on to Barbadians with respect to the value added tax, which we have.
Secondly, we’ve also ensured, as you know, that we have done a number of other things and I’ll come back to them to remind us because sometimes we have short memories. But the reality is that the Government has determined now that every Barbadian household should have the first 250 kilowatt hours removed from the VAT rate of 17.5% to a new VAT rate of 7.5%.
This is going to represent on average a savings of about $17 to every Barbadian household, regardless of whether you use 250 kilowatt hours or not.
This, my friends, is critical, and it may not be a lot, but when you see it and in conjunction with the other things that we are doing, then you will understand the wisdom of the old Barbadians saying that “one-one blow is kill old cow”.
The reality is that 63% of all households in Barbados, according to the data from the Barbados Light & Power, use 250 kilowatt hours of electricity or less. And that, therefore, will mean for them that their bills will move from $204.46 down to $187.06. This, my friends, will cost the government of Barbados $1.527 million a month and therefore overall will come to $10.5 million, running from the 1st of August to the 31st of January.
Let me now address my mind to the removal of VAT on certain food items and the reduction of duties and removal on others. At the moment we have a wide basket of goods that Barbadians have become accustomed to for which fat has been removed for a long time. The government recognizes that we need to add a few more items on that basket to that basket of goods.
One, we are now adding hot chocolate, corn flakes, cream of wheat, sliced ham, black tea, honey, peanut butter, pears (And I don’t mean the avocado pears). I mean pears — the fruit, apples. And those are the items for which VAT will be removed.
We are going further, however, for there is no VAT on citrus and we are now seeking to remove the duties on citrus, conscious that this effort will help Barbadians build their immune system and continue to help us in the fight against COVID, which regrettably is still very much with us, even though thankfully for the most part not as a major threatening disease to the majority of Barbadians.
Against that backdrop, Minister Straughn therefore will speak to the removal of duty on oranges, grapefruits, lemons and limes to ensure that we boost all Barbadians’ immune system by reducing the duties on those limited items.
The next matter I’d like to address is a compact with the private sector companies who have come on board, and who have committed with us having to go to the issue of price controls, which we all know have led, in many instances, to shortages and scarcity and have adversely affected how societies function.
I want at the outset to thank Senior Minister Kerry Simmons, who has worked along with Minister Colin Jordan, with me on this matter over the last few days, along with Ambassador Clyde Mascoll, and Dr. Kevin Greenidge to ensure that we have this level of engagement.
And truthfully, I also want to say to the captains of the private sector and in particular those within the supermarkets, within the wholesale, retail and distributive sector, and those, for example, within the farming community, the poultry community, the pig farmers, and generally, I want to say a great thank you for your coming together under this pressure and agreeing that in this country we are always best when each of us works to put something on the table voluntarily.
We don’t do this out of the blue. We have inherited a form of governance for the last 32 years that has led to us being able to benefit from a social partnership where we recognize that the voluntary compact of how we treat to each other is critical to who we are as Barbadians under the compact worked out yesterday and which will be signed on Saturday morning by the government, the members of the business community, and we will invite the Labor movement to witness it, the following additional relief measures will be implemented from July 21st and run until January 31st of next year.
Let me be clear at the outset. It is not every item, but they are a sufficiently large range of items here that any family can live and live well. And I make it clear this is not going to give you the mixed nuts or the fancy cheeses or a lot of the fancy cuts that people rely on. So what is it you’re asking? This is a lot of long talk people want to hear.
Let’s go. 1) Whole chicken, chop-mixed chicken, stew chicken and chicken backs; 2) Pork hind legs and hind leg chops, in particular, stew pork, knuckles and hocks.
Let me pause and be very clear. We have not included chicken legs and thighs. We have not included chicken breasts. But we’ve included whole chicken. We’ve included stew chicken. We’ve included the chop-mix and we have included chicken backs.
We have not included leg pork. We have not included spareribs. We have not included loin chops. But we have included hind legs, hind leg chops. We have included stew pork. And for anybody who knows me, we’ve included knuckles and hocks which they tell me is not the best, but is the sweetest. We have included beef stew.
We have included breakfast oats. We’ve included slice ham. And, as I said, the VAT is being removed from that. We’ve included Milo. The VAT is to be removed from Milo — I’m not sure if I mentioned that just now — and also drinking chocolate.
We have included also eggs, evaporated milk, baby food milk. 2% milk, New Zealand cheddar cheese, soyabean or sunflower cooking oil, rice, long macaroni (they don’t have elbows), Eclipsed biscuits and Soda singles or multipack biscuits.
Let me be very clear — salt bread for all of the bakers, but only certain bakers will do white sandwich bread and wholewheat bread, oranges, apples, sardines, tuna — whether in oil or water —, sardines — whether in oil or water —, corned beef, split peas — fresh split peas, pigeon peas, tin and fresh black eyed peas, flour, margarine, (And this is Sunflower margarine.
And to be specific, black tea. And by black tea we mean the normal Lipton’s, Red Rose, etc. Tea unflavored, not the flavored tea, Cream of Wheat corn flakes. We didn’t say all the other fancy cereals, just corn flakes, peanut butter, chow mein, ramen. And the sweetener that we’ve included in here is honey.
On this last food item, there was much debate, and in the end, there was general consensus that even though all of the items that we have included here for the most part are healthy items, that there is one thing that every now and again people need to be able to have a little breather, pigtails, and therefore those who like pigtails would be able to flavor the pot with it.
And then, of course, it isn’t only food that keeps a family afloat. People need personal hygiene matters to be addressed. We’ve included toilet soap, toilet paper, sanitary napkins, baby diapers, single toothbrushes, toothpaste, roll-on, deodorant and bleach to clean.
My friends, in several instance, I’m sure that consumers will see significant reductions in the prices. And I’d like to pause for a moment and to share with you what some of those prices could be. Even before I do that, I already know. And Kerry said to me, ‘Prime Minister, some people are going to say that yuh left out this and yuh left out that!’. And I said, ‘Yes, because we cannot be all things to all people, but we must give people a pathway to survival, a pathway to keeping their families’ heads above water in the rough seas. We are going to tread water together and the time may come again when we can do more things, but at this time of grave uncertainty in the world, what is important is that we try our best. And I think you can agree that for these 44 items, the level of price reductions that I will certainly share with you on some of them, we want to salute all of us for bringing these changes to the table.
Kerry is reminding me, and I thank him — he’s here by my side — that yesterday in the United States of America, the United States media reported a 20% increase in chicken. Today, as a result of this compact, I am in a position now to say to you, and I goes to a number of things that have been prepared by the Ministry of Commerce and the private sector for me to share with you, but the full list of all 44 items will have the prices on Saturday morning when we sign the compact.
For example, Amir’s halal chicken — chop mix will go from $19.99 per kilogram to $15.29 per kilogram, a savings of $4.70 or 24%. Chickmont whole chicken will go from $14.05 per kilogram to $11.58 per kilogram for a savings of $4.70. or 24% reduction. And that would mean, for example, that a whole chicken, which is typically one and a half kilograms, would go from about $21 down to roughly just over $17.
Amir’s chicken backs will go from $7.29 per kilogram to $5.59 a kilogram, a saving of $1.70 or 23% again. Similarly, fresh chicken stew jumbo per kilogram, will go from $15.79 per kilogram to $12.09 per kilogram, a savings of 23%.
Similarly, pork stew with the bone in per kilogram will move from $24.75 per kilogram to $19.05 per kilogram, a savings of $5.70. The hind leg pork chops will move from $24.75 a kilogram to the same $19.05 a kilogram, a savings of $5.70 per kilogram or 23% again. Fesh pork chops will go from $14.99 per kilogram to $13.50 a kilogram, a savings of $1.49, a reduction of 10%.
And let me say here that with respect to that, you would not have the same level of decline because those were already at a lesser markup than those other pieces of poultry or pork that I referred to just now.
Tropical fresh eggs will move, a dozen of them, from $10.09 to $8.15, a reduction of a dollar 94 or 19% reduction. Imported gala apples, the small ones, each one will move from $0.80 to $0.65. And I’m told by Kerrie that there will be further savings there, because the VAT also has now to be taken out of that. So we expect that to go even lower than the $0.65.
Florida oranges, because of the removal of the duties that will and the reduction by the private sector is given for the next six months, that will move from $1.80 per orange to a $1.15 for orange, a savings of $0.65, a 36% reduction.
Because we are serious about Barbadians being able to build up their immune system against the dreaded COVID 19.
Bleach. A gallon of bleach will move from $7.39 to $6.99 a reduction of $0.40 a reduction of 5%.
Milano Macaroni, 400 grams, will move from $2.15 to $1. 95, a saving of $0.20 or 9%. Country Girl rice, parboiled, under 1750 grams will move from $6.25 to $5.69 for a savings of $0.56 or 9% in terms of markup.
Dove roll-on, for example, 50 mm, will move from $4.10 to $3.15, a savings of $0.95 or equivalent of 23%. Bumble Bee tuna, the five once tin, will move from $3.45 to $2.80 a savings of$0.65 or 19%.
Evaporated milk, Sun Gold 250 MM, will move, for example, from $2.25 to $2.18 a savings of $0.07 or translated to 3%. Pine Hill Dairy 2% milk will move from $7.35 to $6.55, a savings of $0.80 or a translated reduced cost between them and the distributors of 11%.
And let me pause and say here that we are going to have to address the difficulties with the price of milk in this country. And it’s not an easy solution. The last government brought is cess, which was announced by the previous Minister of Finance, but it was never implemented. The state of the dairy industry is going to require serious discussions and I cannot make promises that there will not have to be some impact on milk prices at some point in the future in this country. But we are going to hold over the course of the six months with .
Wibisco Eclipse will move from $2.25 for the 113 gram part to $1. 95, a savings of $0.30 or indeed 13%. Sodabix, which I prefer, will move from $2.25 to the same $1.95, same $0.30 saving.
Purity Old Time Salt Bread alone will move from $4.75 to $3.95, a savings of $0.80. Similarly with Crumbs salt bread, a package of seven will move the same distance down and Crumbs and other bakeries will also offer reductions on whole wheat bread, sliced bread and white sliced bread.
Valrico yellow split peas will move, the 400 gram package, from $1.65 to $1.55, a10 cents saving or a reduction of 6% in the markup. Pigeon peas will go, 400 grams, from $3.10 to $2.68, a savings of $0.42 per part or 14%. Black eyed peas will move from $2.80 to $2.65, a savings of $0.15 or 5%.
Corn Flakes 405 grams box will move from $14.45 to $11.67, a savings of $2.78 or 19%. Colgate Cavity Protection Toothpaste will move from, four ounce tube, from $4.75 to $3.75 or a savings of a dollar, a reduction of 21%.
Huggies Snug and Dry Stage Three, hundreds, will move from $67.55 to $66.95, only a reduction of $0.60 or 1%. And remember, we had already removed the VAT on adult diapers and baby diapers, sanitary napkins and a number of other things on the 1st of April of this year, when I did the budget in March. So you’ve already seen reductions on those.
Stayfree Maxi Regular, with wings, moves from $3.65 to $3.20, a savings of $0.45 or a reduction of 12%, and Economy toilet tissue six pack will move from $5.95 to $4.60, a savings of $1. 35, or a reduction of 23%
Those goods that I just announced today would normally cost for us at the current price $294.38,and would now be reduced to $251.80, a savings just on this basket that have announced of 40 to 58.
I haven’t included in here peanut butter, or honey ,or cheese, or chow mein, or ramen, or the pigtails, or indeed the flour, or a number of other things. And the truth is that I really feel proud to lead a country where the people can come together as one and agree that the circumstances of what we are facing in this nation against a backdrop of global uncertainty and the current inflationary pressures as a result of both the supply chain disruption from COVID, from the war in Ukraine and simply from the logistics being , has meant that the inflationary pressures are literally choking billions of people across the world.
And our own little part, if we had to go the route of price controls, it would have led to the regrettable, awful days in the past where scarcity and adversity and corruption associated with this, we are benefiting from the social partnership that we have. And therefore, against that backdrop, I’m happy.
With respect to animal feed and the circumstances as it relates to our farmers, we have already had the commitment from the parent company of Pinnacle Feeds and Roberts manufacturing that they will not further increase the animal feed prices for the next six months unless there is some extraordinary event way beyond all of our control.
Indeed, they have already reduced their global net margins by about 24. And the truth is that while there is a lag in corn prices, the truth is that global corn prices have started to come down. But we will not see that for probably another two months or so because there is a lag between the global price of today and when we receive the product.
Similarly, Minister Symmonds has also gotten a commitment from the floor mill that they will continue to hold prices to suppliers for the next six months because they, too, are also facing, as you know, international commodity prices.
My friends, this is not perfection, but this is being the best that we can be as Barbadians, recognizing that there are some among us who need a little easement. And as the old people would say, when they do that, then it is a case of us supporting who support us. I can say “Bet who bet you!”, but the truth is that over the course of the next few months, the Ministry of Commerce has been reminded of the commitment that was given to them and which they accepted in the Budget to continue to monitor prices twice a month, to ensure that we are in a position to make sure that these commitments which are being given are real.
And let us be very clear. We had rough and full and frank discussions, but the sense of patriotism to this country by all at the table was such that we recognize that we need to put the best foot forward in ensuring that we have these things. And since a brand and a reputation is only as good as it is credible, the robust program of monitoring and publishing of prices, not only to the public, but also to the Cabinet every two weeks will ensure that Barbadians will get the best prices where they can.
There is a distinct possibility that some of the wholesalers, like Robert’s Manufacturing, may be prepared also to wholesale margarine and oil, given the fact that we are really trying just to create opportunities for people, but we are realistic too, because people in a supermarket may decide that “let me just pick margarine here rather than go into a separate place for that”.
The truth also is we have not included vegetables in here because we are working with Barbadian producers as well as working with those importers from Guyana and Suriname as we speak, to see how we can continue to reduce the price of vegetables, in particular in the markets, as opposed to anywhere else, because that is where we all know the cheapest vegetable prices are always falling because they don’t carry the overheads that supermarkets carry.
But equally, the supermarkets give us a convenience that does not require us to go multiple places to get it.
The other major item that is not included here, and Minister Symmonds has been tasked along with Minister Adrian Ford and Minister, where to continue the discussions, simply because we could not complete all in time. And that is with respect to the provision of fish. The government of Barbados spent a lot of money last year introducing fish aggregating devices (fads, as they are called), which allow people to go less distance and spend less money on fuel because the fish aggregate closer into our coast than they would otherwise do.
Indeed, the problem that we’ve had has been to encourage persons not to pick up the small fish, dolphins in particular, that are too young and to allowed them to grow to maturity. If not, we will have a problem with this stock.
My friends, in recent times we have seen an increase in fish prices in this country that is high. Supermarkets have reported that prices, for example, of dolphin have gone from $10 a kilogram to $16. And therefore, we need to understand better what is informing this level of increases within the fishing industry and to see how best we can work together to ensure that Barbadians can still have access to affordable fish.
As I said on the issue of vegetables, I await Minister Weir’s continued work with the Ministry of Agriculture in Guyana and in Suriname, as well as with our importers, to ensure that we can move forward by bringing further the price of vegetables down. But as you already know, government has invested heavily in a FEED program to ensure that more Barbadians are getting into the business of farming.
I am happy to see that the Lears land project is also now getting off the ground and indeed the Browne’s River catchment has started. With respect to the issue of Project CARE, I received, and Cabinet approved only about a week ago, a program from Minister Weir called Project Care (Community Agriculture Response and Empowerment).
And this project provides opportunities for communities to plant their own food. The BADMC and the BAMC will provide support with land clearing, cultivation and planting material. Indeed, a tool kit with a shovel, hoe, fork, hose, spray can and seedlings will be included. And the project has already attracted the support of private sector members in order to assist BADMC and Gale’s Hatcheries has already come on board to work with the Ministry of Agriculture to ensure that we can provide baby chicks.
We have also today asked Minister Weir to include in that a provision for those who would want rabbits. And we are also working with the Guyanese government to get the Brazilian black hen here in order to be able to help those families, to help themselves.
My friends, we are going to also have the DMC and BMC produce a series of videos of how to grow in agriculture, how to risk stock in agriculture, so that persons who may not remember or whose parents may not have shown them, will get the benefit of these short videos in order to help them raise up to the level of themselves being part and parcel of the solution to ensuring that we can provide for ourselves with respect to food security.
The thrust of the program of Project Care is to provide fellowship for the elderly and younger people, to provide revenue for young persons who want to go and do the work. And to bring communities together generally and to ensure that those below the poverty line are not in a position to be left out of helping to cope and to face off these high winds that we are facing with respect to food costs.
Before I finish, I also want to make two other points. There is going to be an announcement and Minister Straughn will confirm that the price of hybrids duty, import duty on hybrid vehicles and I promise that we would review it, haven’t given the tax holiday on electric vehicles that we would address the issue of a reduction in duties on hybrid vehicles.
The import duty on hybrids for plug ins will go to 25% and for regular will go to 35%. Both of these are down from 45%, and this will be effective from the 1st of August 2022. I’m not sure whether I made it clear that Barbados Light & Power VAT reductions will commence from the 1st of August 2022 and run to the 31st of January 2022.
My friends. All of this comes against the backdrop of a host of other measures that this government has put from day one. We have tried to make it possible to increase disposable income in spite of the circumstances that we inherited.
One, you remember when they told me that we could not increase non-contributory pensions for persons in this country and that it would break all of us — break the central government? And we said, “Watch us!”
We put a cap, as I said, on VAT, on fuel at $80 USD, even though fuel as we speak is having gone to over $125, was back to about $104 /$105 US in the last day or two.
We put a cap on freight costs at $7,350 US per 20-foot container and US $8,000 us for a 40-foot container in order to calculate duties.
These were the prices at December 2019, but every importer will tell you these are not the prices that they are paying for freight in this world today, nor have they paid these prices since 2019.
Similarly, we had introduced and continue to carry the Adopt-A-Family program at $600 per month for the vulnerable families in this country. And this is without prejudice to the increased welfare rates and expanding what the benefits are under the welfare program.
This has nothing to do, my friend, with the fact that over the course of the last year as well, Barbados faced three of the worst climatic events it has faced since being an independent nation — 1) the ashfall, 2) the freak storm, and 3) Hurricane Elsa — and we are still as a government working and carrying the costs of the replacement of those houses and the repair of those houses. And that cost is going to be significant.
And may I remind us that 90% of those people who are affected are below the poverty line, and 95% of them were without insurance.
We also, as you know, would have introduced the excise and VAT holiday, I said, to electric vehicles. We waived import duty and VAT on the importation and installation of generators for residential properties. Those of you who have forgotten it, it is hurricane season. Go there and buy your generators, please.
We have also expanded the reverse tax credit before, as you recall, in 2019, for persons earning $18,000 to persons earning $25,000. And then the compensatory income credit, which we still provide, even though there has been COVID and all of the other pressures that we face. So people earning just under $3,000 a month, between $25,000 and $35,000 a year get back every single cent in income tax that they’ve paid as a compensatory income credit. And we have said we will continue to do it as long as our cash flow and circumstances allow us to do it.
Similarly, this is the same government as we remained in others over the last two days that reduced corporation taxes from 30 to 28% and then down to five and a half per cent with a declining base to 1%. And we are conscious that we may have to address corporation taxes again in the future because of the global minimum corporate tax debate. But at this point in time, those companies in Barbados continue to benefit from perhaps one of the lowest corporation taxes in the world, and hence why we are in this position to work with them today to reduce these prices significantly.
Similarly, as I said, we have also ensured that we adjusted those things that we promised in the budget — sanitary napkins, adult and baby diapers, multiv-itamins. And all of those came in already.
My friends, we have done a hell of a lot to shield Barbadians in this difficult environment. And God knows I wish we could do more. Trust me. But let us understand that the world in which we live is not the world that we knew a decade or two or even three. I comment often to those in Cabinet that the experience in Cabinet this time round is so significantly different from what it was when we left in 2007.
And believe you me, I am telling you that we have therefore to ensure that every day we redouble our efforts.
As we met with the private sector this week, they spoke to us about another major difficulty that they face and you face it as householders, too. And that is the conundrum with respect to how are we going to deal with this issue with bank fees.
I, like you, believe that conversations must obtain first before legislation. And, therefore, we have to understand that as consumers, when we look at prices, we often look at specific product items, neglecting other factors that contribute to it. One of these issues that contribute to it is bank charges.
And indeed, what we’ve learned is that with the move from a flat debit card charge to a transactional fee, in some instances over 3% on the transaction, then we will have a difficulty because the companies now have to carry that cost and the cost of goods that are being sold as they do their business.
This is reflected therefore in the overheads and no doubt it is ultimately passed on to you. So I have already spoken to the governor of the Central Bank last night and instructed him to have an investigation and report to the Ministry of Finance on this matter. Because while we have done some things on fees already, it is clear that we have to revisit it and that we have to encourage our banks to recognize that their core business of making money from lending cannot be abandoned for passive income, for transactions.
For how can we justify? How can a bank justify charging more to facilitate a digital transaction of $2,000 than a digital transaction of $200 or $20? It is the same mechanism. What is clear is that the single decision by banks may hurt consumers at a time when they can least afford it. I am not picking on banks, because I know that we had to deal with the restructuring of debt. I know that we placed a pandemic levy on them.
But let us be clear. When I place the pandemic levy on those companies that made profits during the course of the pandemic in 2020 and 2021, some accused me of retroactive legislation. Some accuse me of all kinds of things. And let me say, one, it cannot be retroactive when it’s first being charged in July, having been announced in March. And secondly, its historic base is no different from using the historic base on corporation tax, using a historic base on income tax or using the historic base on many other taxes that are done.
And then thirdly, we introduced this in March, nor later had we introduced it, the United Kingdom introduced a similar type of windfall levy on oil and gas companies, and those in the United States of America are considering doing a similar thing.
Let us be real. What guides us and this government is a simple principle — Share the bounty, share the burden. Share the burden, share the bounty. That some will make egregious profits at a time when others are sucking salt, then we have a duty to try to level the playing field to make sure that on this small rock of 166 square miles, as many people as possible can continue to keep their heads above water and wait for that day of bounty again when they shall all share.
It is why, for example, we have become the first, and if not probably the only country in the world, that is committed to giving its home owners the benefit of renewable energy and the bounty that comes from that on a monthly basis, rather than simply having foreign investment come in and take up all of the opportunities as we seek to do what is right to be able to reduce our reliance on fossil fuels.
And we believe that this will help us save our sugar industry, help us save our agricultural sector, which does not benefit sufficiently from scale, and help us to save my friends the housing boom that we need so badly to invest in.
With respect to other matters, we expect that we will have over the course of the next few months to have discussions with all kinds of people with respect to being able to get some of these things concluded.
My friends, today I am telling you, Barbadians, that while we are not out of COVID 19 woods yet, there can be no denying that the success of this country has been in fighting this pandemic as a total country, not as public sector, but as private sector, but as a whole nation.
The whole-of-nation approach worked for us when we wanted to save the Barbados dollar when we were elected as a government. It worked for us when we wanted to save us through these two years of COVID, and we cannot ask for a more appropriate model, therefore, to ride out this storm of inflation and indeed the other matter that I will refer to just tangentially with respect to crime in this country.
We have to, in this time of war, a world at war with COVID, a world at war with climate, a world at war with war in Russia and other parts. We have to understand that we must moderate our expectations, understand that we live in a different time, but be prepared at all costs to keep our heads above water.
And we do this best not as individuals, not as government, not as private sector, not as labor, but as Barbadians working together as one. As a government, we will always try to maintain a dynamic approach to the management of the affairs of our people, particularly those at the bottom and at the middle of the socioeconomic level, where regrettably the pressure is greatest. And notice that I said, also in the middle, because I recognize that a lot of people who are working are also becoming, in some instances, under severe pressure because of the inflationary pressures.
But, you know, our grandparents got through it. When I was in the room, I asked the private sector: “Do they know what is big-grain rice? Only one man in the room knew what big-grain rice was. It is sweet potato. There was a time in World War II when Barbadians, I am told, could not get rice and could not get a lot of supplies, and they had therefore to rely on what they could grow. They grew sweet potato and used it in every possible way. Before the days of cauliflower rice, big-grain rice was the rice.
Today, I want to salute the private sector companies who have come on board and have committed to this substantial number of items, 44, recognizing that even without us putting in place price controls, that they are prepared to ease the burden of the average Barbadian household.
As I said, we salute them.
Early this year, government made the decision to reduce its revenues, as I said, at the pump for six months. I wish I could do more on gasoline and diesel, but we cannot at this stage. The cost to us of the VAT on electricity going to seven and a half percent will be just ten and a half million dollars. The cost of the summer feeding program will be two and a half million dollars. The cost of the reduction of VAT and duties is likely to be in the vicinity of about four and a half to 5 million, and Minister Straughn will give the exact figures on Tuesday morning.
In his ministerial statements in a couple of months, in fact a couple of weeks, when we commence government negotiations with the labor unions, we will also be appealing to labor to exercise similar flexibility. Every one of us must put something on the table if we are to get through these rough seas. The Landship tells us about rough seas all the time. So that is part of our psyche.
And why are these sacrifices necessary at this time?
Because how we make it through this period of crisis depends on the willingness of all of us to sacrifice for the benefit of the whole —all of us. From me, right back down. Our history as a country shows that we have overcome challenges that seemed insurmountable before, but we did it through sacrifice, which involves many for the many and not many for the few.
Barbadians, even though the Attorney General has spoken, and even though, as I said, I will speak on other matters shortly, I want to tell you that I cannot but speak to you in the future on this spate of crime, believe you me, to reinforce the message of the Attorney General and the Commissioner of Police, but not today.
I therefore will end, however, by appealing to you in general, especially after yesterday, again, that every citizen of this country must recognize that we need a whole-of-country approach if we are to overcome all of these challenges, not just the inflationary ones, but the ones that are hitting us all at once, whether they are social or related to crime or economic or indeed environmental.
These measures, my friends, represent part of a multifaceted approach. And each citizen, each Barbadian, each person resident here has a role, a part, to play. For the past four years, I’ve been saying repeatedly that we are all in this together. Being in this together means that we are not only responsible for ourselves, but you and me. We are responsible for each other. We will not survive these trying times by pulling against each other or by catching on to narrow interests. And in 166 square miles, believe you me, none of us can hide. We are in this together.
The attempts to keep everyone’s head above water requires that mothers and fathers and brothers and sisters and families and friends must not uphold those whose involvement and reckless and criminal activity is undermining our best efforts nationally and internationally.
Not only does it compromise the safety of all of us, but it compromises our capacity to attract tourism and other investment revenue that keeps our people in jobs and keeps our heads above water, and that keeps us being able, as a government, to do more to help you as citizens.
The burden and the responsibility must be felt and must be carried by all of us, without exception. I hope each of you heeds this clarion call and recognizes that in addition to the measures that I’ve just announced, including the monitoring and enforcement of prices and the jobs that may come from what we’re doing generally, that we will see it as our responsibility to reprimand and call out anyone, whether in the commercial sector, in our communities, in the social sector, who feels that it is their business to engage in activity that is deplorable, unacceptable or indeed criminal.
Being in this together means that we must help us to help you — help us in rebuilding this nation. I look forward to speaking to you, as I said, over the course of the next week, ten days with two more conversations, one, addressing the issues relating to Social Security, and one generally addressing the issue relating to us continuing to have a whole of nation approach to how we treat to this issue of crime.
But for this moment in time, we believe that these initial measures will go a long way to easing the burden of Barbadians over the next six months. It is not all that we would have liked to have done, but we are realistic and we are taking our time because with each steady step we can ensure that we continue to build this nation and make life better ultimately for you, our children, and our children’s children.
God bless this nation and may each of you join us in this battle to build this nation and to stave off these high winds that we are facing from the international community and those that people may want to generate locally.
Thank you very much.