The Barbados Economic Society (BES) is issuing a word of caution to Government when it comes to offering concessions.
This comes in light of the recent International Monetary Fund 2013 Article IV consultation report which said the Government’s tax base had been significantly eroded by waivers and exemptions.
“[S]ome of the 2013 measures move away from the goal of expanding the base, and concessions to specific tourism projects in late 2013 further erode the tax base and create a non-level playing field,” said the IMF.
President of the BES, Jeremy Stephen, told Barbados TODAY it had become necessary therefore for Government to employ “a more rigid and discipline approach towards the allocation of concessions towards new investors in our economy”.
“We do need new foreign exchange. That is a very known fact, but still you shouldn’t be able to put the Government in a tighter fiscal position by reduction in tax revenues without having prevailing gains in foreign exchange and developments throughout the economy,” he said.
Stephen added that the society believed that the concession policy could include firms that may not originally be considered “classical” foreign exchange earners but they would attract considerable amount of foreign exchange.
“So again we would recommend and agree with any changes in concession policy. However,” he said, “there has to be analysis to ensure there is a close relationship between the size of the investment being made, the loses on the tax side of the concession and the growth in foreign exchange and GDP. Once that clear link is made then by all means we support it.”