If there is one wish that president of the Barbados Bankers’ Association Glyne Harrison has for the New Year it is for Government to give commercial banks a tax break.
Harrison explained that banks were being good corporate citizens that paid their fair share of “huge” corporate taxes, deposit insurance and the controversial tax on assets and they deserve an ease.
“Banks are conservatives and we comply with what is required of us but if one was to go we wouldn’t not be pleased,” he told Barbados TODAY.
Last year Government estimated that it raked in about $2.5 million from commercial banks during the 2014 financial year from the tax on assets.
Earlier this year credit unions were also required to pay 0.2 per cent tax on their total assets after unsuccessfully fighting its planned imposition for almost a year.
Arguing that Government could not tax itself out of the economic downturn, Harrison told said it was time to identify “growth options and growth spurs” to improve the economy. However, while unhappy with the many taxes, Harrison said the financial institutions were prepared for them.
“In the interim while tax is the tool that is being used the banks have sort of put that in a position where you have budgeted for it. So if it continues we are prepared for it, if it doesn’t continue then it is something we can now look and see how best can we use that sort of additional income that is there and available,” said Harrison.
The banking executive said the lending institutions were wary of the fact that “anything is possible and one tax may replace another”. However, he insisted that commercial banks had paid their dues and it was time they were freed from some of the tax burdens.
“We have been playing our part for a long time and we really and truly have done a whole lot as it relates to taxes in terms of tax on assets; we still pay deposit insurance [and] we still pay our huge corporate taxes. So we really and truly have carried our part and we would be pleased if it was time to relieve one of those pieces.
“The whole matter of tax on assets is still there. So we are still continuing to be the good corporate citizens and to pay that additional tax until it is removed. And the whole matter of things such as Foreign Account Tax Compliance Act, while it is a compliance matter there is still a real cost to banks from a FATCA perspective,” said Harrison.
He explained that commercial banks had to put processes and resources in place to ensure compliance with FACTA, the United States law that targets tax non-compliance by US taxpayers with foreign accounts.
“So when you look at these different pieces you start to see that from an industry perspective when you couple the sort of low demand for credit against these internal kinds of costs you see that banks are still in a position where they have to very much watch the different areas they are in to ensure that the principal can get some returns,” he said.
Restating his case for a tax ease, Harrison also highlighted the investments the financial institutions continued to make in technology, human resources and infrastructure in the form of new branches or the upgrading of
He said it was something the banks were proud of, although these investments came at a high price.