Barbadian businesses importing goods from the United Kingdom might have lost millions of dollars to the Customs & Excise Department over the past two years because the Government department had not been updating its exchange rate to reflect the daily rates issued by the Central Bank of Barbados.
And in making the revelation Friday at a Let’s Talk Business Facilitation seminar at the Hilton Barbados Resort, hosted by the Barbados International Business Association (BIBA), Managing Director of MegaPower Limited Barbados Joanna Edghill suggested that they continue to lose money because of the fixed rate that Customs uses.
Edghill explained that despite the daily updates from the Central Bank, the department that administers and collects the duties levied on imported goods maintained an exchange rate of over S$3 to the pound.
“The Central Bank in Barbados publishes a daily exchange rate, which is not reflected at the [Bridgetown] Port. This is specific for the sterling rate, which has been fixed for the last two years. The Comptroller of Customs rate has been BDS$3.3523 to the pound for two years despite the pound consistently weakening during that period,” Edghill complained.
She said the last Central Bank rate when she cleared items at the Port on July 4, 2016 was set at $2.7065, but the Port maintained its $3.3523 rate of exchange.
“I have been shouting about this for six months plus. The comment really leads to the processes, the processes for change or really the delegation, who, how, when, makes that change?
“What it means per unit for me is that I land a car costing $15,600 at $3.3523 I am paying . . . $2,800 in duties. If it were the rate that the Central Bank of Barbados publishes I would be paying that $2.7066, which per unit is a differential of $5,500. Imagine the 60 units that I plan to land between now and Christmas, that’s $330,000 in exchange rate losses that aren’t really exchange rate losses. So it is a discussion point,” Edghill added.
The issue has been a bugbear for BIBA, according to Director Connie Smith.
It has also been raised by the Barbados Hotel and Tourism Association, Minister in the Office of the Prime Minister with responsibility for Immigration, Telecommunications and Invest Barbados Senator Darcy Boyce admitted.
Boyce, who was recently charged by Prime Minister Freundel Stuart with the responsibility of facilitating business, said he had brought the matter to the attention of the Barbados Revenue Authority (BRA), the revenue collection agency, and he had been assured that it had been rectified.
“I was told that the matter has been fixed, so I will double check and make it is so that it has been fixed,” the Government Senator told the audience.
Boyce agreed that there needed to be an automatic change of the rate at the Port once it was updated by the Central Bank. He promised he would speak with the Central Bank to see how best that institution could communicate with the BRA to have the information updated in very much the way it is done at commercial banks.
“The Central Bank need to send it to them like they send it to the commercial bank; send to the Customs people all the rates and they have to put it in the system,” he said.
However, BIBA President Greg McConnie said rectifying the problem was more complex, and that a change of legislation was needed.
“As I understood that, in order for the Customs to change the rate it has to be gazetted. So there is a problem doing it daily. So we need to get the law changed so that it doesn’t need to be gazetted,” McConnie suggested.
This seemed to have caught Boyce by surprise, with the senator agreeing that it was “strange” that the rate had to be gazetted before it was changed by Customs.
Executive Director of the Barbados Chamber of Commerce and Industry Lisa Gale also pointed out that members of that private sector body had been having the same concern.
“It was actually gazetted on May 23, but the letter was only written July 7 to inform the various private sector associations. We received our letter on Monday [July 18] indicating that it was brought to $2.90 after the gazette. We have been pressing for this for two years now,” Gale said.
“The only question some of our members are asking is since the gazette would have reflected May 23 and persons would have cleared quite a number of good; would they be able to retrieve the excess duty they would have [paid]?” Gale queried.
Boyce thought it was a “very interesting” question, and promised to contact the Central Bank to find out whether it was possible to simply notify Customs of the changes and whether these changes could be implemented without going through the gazetted process.