Minister of Finance and Economic Affairs Chris Sinckler today promised that some of the temporary tax measures introduced in the Government’s 19-month economic stabilization programme would be removed by March 31 next year.
Though not disclosing which measures, he hinted, during an address to the opening of the 22nd Annual Conference of the Institute of Chartered Accountants of Barbados (ICAB), that they would be replaced with other revenue or growth measures. He declined to go into details.
“The Government of Barbados has made a commitment and I believe we should stick to that commitment, that come the end of this current financial year, many of the temporary taxes, which we implemented in the 19-month programme, some of which we extended for another year last year, should be brought to an end [and] should not continue beyond March 31,” Sinckler said to cheers.
He added: “That is our commitment. In the preparation of our Estimates, we have already begun to factor in to those Estimates how we are going to manage without those taxes imposed on the society. Now, I haven’t said what we are going to replace them with, so don’t get too excited,” he quickly added.
In the same address, Sinckler defended tax rates in Barbados, including the 17.5 per cent Value Added Tax (VAT), saying average tax rates in some jurisdictions were significantly higher. He also dismissed suggestions that the country was overtaxed.
Though admitting there were “a lot of taxes”, Sinckler said the problem was that people were not paying their fair share.
“Many countries in the world do not begin their income tax applications with a 25 per cent deduction in their tax and that deduction, because of our universal access principle, is given to everybody, pauper and millionaire,” he said. “So whether you are earning $1 million or you are earning $0, the first $25,000 is tax-free.”
“Very few countries in the world do that. Very few countries can say that of the $4 billion in assessable income in their country, less than half is taxed. In fact, very few countries can also boast of having largely free healthcare at point of delivery, generally free education up to university level, except for tuition, highly subsidized public transport and all the array of services.”
Sinckler continued: “Barbados has done that. So when we have this view that Barbados is this heavily overtaxed place, if you go check the facts, you will see that is not true. What we do have and what we have to simplify is we have a whole set of taxes that just tend to annoy people.”
He conceded, however, that “we have to move to a stage where we can reduce those taxes”, but quickly added that in order to do so, an improvement in the levels of investment to generate economic activities to raise revenue was needed.
“We equally also have to accept the reality that too many in our society simply do not pay taxes,” Sinckler said, serving notice on professionals who are not paying taxes that he could be taking them to court.
“The bases of these taxes are too small and have been contracting every year,” he added. “That is a major problem in Barbados.
He went on: “There are some professions in Barbados, I am not going to call them, in which more than 40 per cent of the registered members of those professions, do not even file income tax in Barbados, and therefore I am prepared to meet them at the door of the court. Either the law courts or the court of public opinion, because it is wrong . . .”