Finance Minister Chris Sinckler on Monday unveiled a series of new tax measures as the Barbados government warned citizens to brace themselves for 'serious adjustments' in its expenditure for the next 12 months.

"From our analysis 2011 is likely to be the year in which real GDP is expected to grow and our intention is to provide critical assistance to ensuring that this goal is achieved," said Sinckler.

Sinckler, delivering the first national budget of the Freundel Stuart administration, announced an increase in the Value Added Tax (VAT), the removal of tax-free allowances for public sector workers, as well as an increase gasoline taxes, bus fares and passport and immigration services among other revenue measures.

He said the taxes were necessary to deal with a fiscal deficit of 8.4 per cent and that from December 1 this year, VAT would increase by 2.5 per cent to 17. 5 per cent.

"This increase in the VAT is intended as a temporary measure for the next 18 months. I further propose to review this at the end of one year with a view to providing relief subject to progress in reducing the fiscal deficit," he told legislators.

The new measures will raise an additional BDS$124 million (US$62 million) in revenue.

Sinckler said that the government would eliminate the tax free allowances for travelling and entertainment granted to employees resulting in a saving of BDS$25 million (US$12.5 million).

The excise tax on gasoline will be increased by 50 per cent with effect from December 1, resulting in BDS$22.7 million (US$11.35 million) in revenue to the government.