Outspoken Government Minister Donville Inniss is not in favour of the renewable energy sector paying the controversial National Social Responsibility Levy (NSRL).
In his May 30 Budget presentation Minister of Finance Chris Sinckler announced a major increase in the NSRL from two per cent to ten per cent to be applied on the customs value of all imports, with the exception of goods for the manufacturing, agriculture and tourism sectors.
Inniss, who previously made it clear he did not give the Budget his 100 per cent support, today agreed with those who advocate for the renewable energy sector to be exempted from the controversial tax, which is due to take effect in two weeks.
Arguing that in some aspect importers of renewable energy supplies were manufacturers, Inniss said: “We cannot say on one hand we want to develop and sustain the renewable energy sector and then impose onerous conditions on it that prohibits the growth of the sector.
“My own analysis of it wearing a semi-technical hat on tax matters is that the renewable energy sector can be seen on one hand as a manufacturing sector and therefore the National Social Responsibility Levy should not apply because it is an input cost that you are attributing to it.
“On the other hand, or related to that, is that it is a unique service that the state recognizes will save foreign exchange and also help to earn some foreign exchange indirectly, and therefore it is not the intention to kill the goose that lays the golden egg. So I suspect that there may be a little bit of misunderstanding or miscommunication on the issue,” he told participants in Friday’s BREA meeting held at United Nations House under the theme, The State of the Sector: Financing the Renewable Energy Sector in Times of Crisis.
“With respect to the National Social Responsibility Levy, I think we all understand why these things have to be done, but at the same time it is not the intention of the Ministry of Finance or Government on the whole to do any harm to key sectors such as this,” he stressed.
BREA is expected to engage Sinckler on the matter next week, outlining its concerns about the tax, which it described at a media conference on Monday as “a significant exercise of fiscal desperation”.
The Minister of International Business, Industry, Commerce and Small Business Development said based on a conversation with Sinckler today, there will be several discussions next week with stakeholders to “bring clarity to the issues”.
However, while scolding BREA for holding a media conference on the matter earlier this week before taking their concerns to Sinckler, Inniss said that should not stop the organization from submitting its arguments to the minister.
“BREA went and held a very powerful press conference without first talking to the Minister of Finance. So you made your public decisions and now we are going to talk? The Minister of Finance will engage from Monday with several stakeholders on some of the issues that have arisen from the Budget and included in those stakeholders will be the Barbados Renewable Energy Association,” he said.
Making a contribution to the meeting today, Barbados Chamber of Commerce and Industry executive member and operator of Caribbean LED Lighting Inc Jim Reid questioned why there was no consultation with industry players prior to the Budget.
He argued that when the ten per cent tax on imports takes effect on July 1 it would make no sense for his company or other local renewable energy companies to manufacture items here.
In fact, Reid said the levy will make it “cheaper to buy a product from China than bring it in and build it yourself”, and therefore will affect job levels in the sector.