The ruling Barbados Labour Party (BLP) has pledged a package of targeted cash credits and tax relief measures to ease cost-of-living pressures if re-elected, firmly rejecting broad cuts to value-added tax (VAT) that it says may not result in lower prices for consumers.
Speaking at Golden Square on Saturday night during the launch of the party’s election manifesto, BLP political leader and Prime Minister Mia Mottley said the party’s approach was designed to put money “directly back into people’s pockets,” particularly those most affected by rising living costs.
Mottley said the BLP had deliberately turned away from calls to reduce VAT, arguing that such measures offered no assurance that savings would be passed on to consumers.
“Everybody deserves the money back in their pockets and not with some arbitrary reduction of VAT that you don’t know whether the man will reduce the prices in the shops or not or the services,” she told supporters.
Instead, she outlined what she described as “creative and responsible” measures, building on policies introduced since the BLP returned to office in 2018. Mottley recalled that when the party took office in 2019, the reverse tax credit stood at $650 and applied only to people earning $1,500 a month or less. That threshold was later expanded, with the credit increased to $1,300 for those earning up to $2,080 a month, or roughly $25,000 a year.
“As of this year, you will now get $1,700 and not $1,300,” Mottley said, noting the increase was intended to offset rising living costs.
She also announced a new reverse tax credit of $750 for people earning between $2,080 and $2,900 a month, or approximately $25,000 to $35,000 annually—a group that previously did not qualify for such relief.
Turning to proposals by the opposition Democratic Labour Party (DLP) to cut VAT, Mottley issued a sharp warning, questioning both the fiscal impact and the likelihood of consumer benefit.
“When the VAT goes back down to 15 per cent, first of all, he ain’t tell you how much it’s going to cost. Then secondly, he ain’t tell you that you ain’t getting back that money from the merchants,” she said, arguing that prices often rise faster than they fall. “The difference between this government and that (DLP) is that we will put the money back in your pockets at the end of the year.”
For middle-income earners, Mottley said those earning between $35,000 and $50,000 a year would benefit from a compensatory income credit that would refund all income tax paid during the year, once the country’s finances allowed. She cited the example of a worker earning $4,000 a month, or $48,000 annually, who currently pays about $2,875 in income tax.
“You will now get back all of that money at the end of the year,” she said.
Mottley also announced expanded relief for pensioners and vulnerable groups. She said the tax-free allowance for pensioners—already increased from $45,000 to $50,000 last year—would rise further to $75,000 if the BLP is returned to office.
Acknowledging that some pensioners, welfare recipients and special needs grant beneficiaries would not benefit from tax changes because their incomes fall below the threshold, Mottley unveiled a new cost-of-living cash credit.
“We will give every pensioner, contributory and non-contributory, every welfare recipient and every recipient of a special needs grant, adult or child, $1,200 a year,” she said, adding that the payment could be taken monthly, quarterly, semi-annually or as a lump sum.
Mottley stressed that the proposals were fully costed and published in the party’s manifesto, noting that benefits for pensioners alone would amount to $142 million.
Her comments come as cost-of-living relief dominates the campaign ahead of the February 11 general election. Several parties, particularly the opposition, have promoted VAT cuts as a key policy response.
However, the Central Bank of Barbados has cautioned against sweeping VAT reductions. Governor Dr Kevin Greenidge warned this week that such measures could threaten fiscal stability, increase debt pressures and fail to deliver meaningful benefits, especially to vulnerable households. Similar concerns have been raised by economist Professor Troy Lorde, who has argued that targeted, evidence-based interventions are more effective and economically sustainable.
Referencing those warnings, Mottley accused the opposition of failing to explain the financial implications of its proposals.
“This government is putting money back into your pockets immediately and that is what is going to make the difference,” she said. “I have heard you on the cost of living, and we recognise that we are in a position now to give you something back.”
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