One of the island’s leading businessmen is warning that the planned introduction of fees on foreign exchange transactions and a whopping increase in the National Social Responsibility Levy (NSRL) could have damning consequences for businesses and the country.
President of the Barbados Chamber of Commerce and Industry (BCCI) Eddy Abed said the taxes announced yesterday by Minister of Finance Chris Sinckler could force some businesses to operate “underground” as they seek “alternative” means of operating, and drive some manufacturers out of Barbados.
“My fear is that the last few years have been so perilous and I am hoping that this does not drive more businesses underground. We have heard of several situations where businesses have gone underground,” Abed said this morning at the Hilton Barbados Resort where the BCCI and PricewaterhosueCoopers held a post-Budget breakfast seminar.
“If we keep doing these bridges and mountains more companies will look at alternative ways of doing business,” he warned.
In presenting the 2017 Financial Statement and Budgetary Proposals Sinckler announced that in an effort to address the troubling fiscal deficit and the precariously low foreign reserves, Government would increase the NSRL from two per cent to ten per cent, and would impose a two per cent commission on foreign exchange transactions.
These measures are expected to earn Government $218 million and $52 million respectively in revenue for the current financial year, he said.
Meanwhile, Executive Chairman of Caribbean LED Lighting Inc Jim Reid expressed concern that the measures would lead to further uncertainty in the economy.
Reid accused the Freundel Stuart administration of seeking to “dampen the economy”, pointing out that some manufacturers had cast doubt on their ability to continue operating here as a result of the two per cent fee on foreign exchange transactions.
The local manufacturer said there were more questions than answers at this stage, and demanded clarity on the measure, saying his company exports over 70 per cent of the products it produces.
“We are a net foreign exchange earner and I would like to know how this two per cent is going to work,” he said.
In his Budget presentation yesterday, Sinckler said the main aim of the measures was to dampen the demand for foreign exchange as Government seeks to shore up the international reserves, which stood at approximately $749 million or 10.7 weeks of import cover at the end of March.