Weekly Report - 02 December 2010 (WR-10-48)

BARBADOS | Taxes and cuts. Taxes will increase sharply under the 2011 budget in a bid to net US$100m for state coffers. The budget was the first task of the new finance minister, Chris Sinckler, who was recently appointed by Prime Minister Freundel Stuart, who replaced the deceased David Thompson in October [WR-10-43]. Some US$62m is expected to come from an 18-month increase in value added tax (VAT) from 15% to 17.5%. Neither this nor the increase in the excise tax on gasoline by 50% went down well with the public but the decision to increase bus fares for the first in nearly two decades, and by as much as 30%, was also deeply unpopular. Sinckler said he was left with no choice but to take unpopular measures to halt the rise in the island state's debt to GDP, which has almost doubled over the last decade from 60% to 110%. The budget also aims to assist the beleaguered tourism sector, the mainstay of the economy, which saw a 6.6% decline in revenues in 2009 as the economy contracted by 3.6%.

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