Minister of Finance Chris Sinckler is facing more criticism over his recent Budget in which he announced a whopping 500 per cent increase in the National Social Responsibility Levy (NSRL) from two to ten per cent and imposed a two per cent tax on foreign exchange transactions, effective July 1.
Management consultant Sandra Husbands, who is also the Barbados Labour Party’s (BLP) candidate for St James South, has described the entire Budget as “heartless” and has warned that it will set off “a social time bomb”.
In fact, she said Sinckler, by way of his $542 million austerity package, has exhibited a lack of understanding of how the Barbados economy really works.
“What has been visited on the small business sector by the Minister of Finance is a travesty . . . and it shows to me, if it is not a lack of understanding then it is heartlessness,” she said.
The former president of the Small Business Association also cautioned that the measures, which are aimed at rebalancing the island’s deficit position, would lead to the demise of the sector.
“People have been starting small businesses to continue to put food on their table; they have been putting themselves in a position to start a business to be able to pay their bills, and now you have introduced a level of taxation that is now going to make it impossible for them to make the effort to look after themselves. And what will happen [is that] they will then find themselves having to come [for assistance from] a State . . . that has not made the necessary provision for our welfare. This is not good enough,,” Husbands, who is also former BLP Senator, contended.
She described the increased taxation as a “social time bomb” that would prevent not only business owners but also regular consumers from having disposable income and saving money.
She said the NSRL and the foreign exchange transaction tax would make local products uncompetitive on the market, with consumers seeking cheaper alternatives.
“When you increase the National Social Responsibility Levy . . . a small business has fewer goods on which to make money. They cannot do what large businesses do – lose on a few items and win on other items. The end result is that they will be too expensive for the person in their community to come and shop with them. That person will make their way to a large business that might have a better competitive price. This is going to shut a lot of small businesses in this country, and without the available income for people to take care of themselves we are setting up a social time bomb,” warned Husbands.
Her comments come amid a warning issued by Sinckler that thousands of public servants could be dismissed from the service if Government is forced to abandon the tax measures announced in the recent Budget.
The National Union of Public Workers (NUPW) is threatening industrial action if Government does not scrap the tax proposals, including the controversial NSRL, or institute a “coping subsidy” for public servants until salary negotiations have been concluded.
However, Sinckler tells Barbados TODAY yesterday the Freundel Stuart administration was fast running out of options.
“I would say that if this really is the union’s position, it is as ill-advised as it is unfortunate at this time. I do not believe that the union leadership is oblivious to the fact that the alternatives to the measures which we introduced, including an increase in the NSRL, will be far more hurtful to public officers than what is proposed,” Sinckler said in response to the NUPW’s latest threat.