In the first sign of Government’s softening of the two per cent levy on foreign exchange transactions, Prime Minister Freundel Stuart this evening said that his administration was prepared to make “minor adjustments” to the controversial tax.
Speaking to reporters during his walk-through of BMEX 2017, Stuart noted that in keeping with the 2017-2018 Budget, the new levy was due to take effect in just under a month from now on July 1, which he said gives concerned sectors time to react.
In fact, the Prime Minister said the July 1 implementation date was “deliberate because we wanted to hear what people thought might be some of the challenges they were likely to face as a result of it.
“So we still have time to listen and to make any minor adjustments that need to be made to facilitate those persons who will be affected by the two per cent commission,” he said.
Delivering the Budget on Tuesday, Minister of Finance Chris Sinckler announced that “in an effort to signal the need to reduce the demand for consumption goods, I propose that, effective July 1, a broad-based foreign exchange commission be charged on all sales of foreign currency at a rate of two per cent.
“This will extend to, inter alia, all wire transfers, credit card transactions, and over the counter sale of foreign currencies,” he explained at the time.
Sinckler also said the measure was expected to raise an estimated $52.5 million over the remainder of the current financial year and $140 million over a full financial year.
Standing amid the exhibition booths mounted by local manufacturers this evening, Stuart said “the whole rationale of the imposition of the two per cent commission is to get people to focus on Barbados, and on supporting Barbadian workers and Barbadian businesses, rather than continuing to use Barbados’ foreign exchange to support manufacturers in other parts of the world”.
However, he said in imposing the tax, his administration recognizes that in some instances the inputs of manufacturers have to come from abroad, so “account will be taken of that because you don’t want to frustrate people’s spirit of innovation, spirit of entrepreneurship by making access to inputs burdensome”.
Stuart said that Barbadians had been talking for a long time about earning foreign exchange, and while he conceded that there was nothing wrong with that, he stressed that “we’ve spent too little time concentrating on saving foreign exchange”.
Therefore, in his estimation, the two per cent imposition was “another way of disciplining the consumer in Barbados”.
Nonetheless, Stuart said citizens were still free to carry out foreign exchange transactions.
“Nobody is going to stop nobody from importing or using foreign exchange to support businesses overseas.
“All we are saying is if that is what you prefer to do, this little penalty comes along with it, because it cannot be that Barbados’ future development will rest on the extent to which we support businesses elsewhere rather than supporting our own here in Barbados,” the Prime Minister stressed.