With ten days to go before the dreaded increase in the National Social Responsibility Levy (NSRL) takes effect, the private sector has reported that some of their major concerns have been addressed somewhat by Minister of Finance Chris Sinckler, who has promised to revise and amend some aspect of the tax.
Emerging from a near three-hour meeting with Sinckler at Government headquarters today, President of the Barbados Private Sector Association (BPSA) Charles Herbert told journalists they were given the assurance that the NSRL would be a “short-term” revenue measure.
Sinckler declined a request from Barbados TODAY for information on the specific areas being examined for modification and the lifespan of the tax measure.
However, speaking on behalf of the business community, Herbert said Sinckler assured them some changes would be made to the contentious levy, which would be taken to Parliament for approval.
“He has assured us that some of the harsher aspects of the NSRL are being considered and in due course we will be told what they are.
“I would expect he is going to clarify this long before July 1. That certainly was the impression that we got. I don’t think he is going to let it come into play before he makes any modifications that he needs to make,” Herbert said.
In a bid to lower the fiscal deficit, which stood at about 5.8 per cent of gross domestic product (GDP) at the end of the first quarter of this year, Sinckler announced in his Budget at the end of May that the NSRL would be increased from two to ten per cent as part of overall efforts to raise $542 million in revenue this fiscal year.
Following the announcement, the various private sector groupings had raised concerns about how the tax would be applied and what sectors it would impact.
Herbert said today Sinckler pledged “the NSRL will be on the cost of production and not on the sale price” in relation to the manufacturing sector, and that it would be a short-term revenue measure.
The BPSA boss also said fresh policies would be developed in consultation with the Social Partnership for the medium-term strategies.
“He [Sinckler] has assured us that dialogue will be coming and it will be coming with a matter of urgency, and to use his words, ‘we will not be meeting weekly, we will be meeting daily’. So he has assured us of significant dialogue and involvement.
“Some of the clarifications we think have removed some of our concerns, and I think that if there are measures that are agreed subsequently that modify the NSRL to help to reduce its impact on the most vulnerable in society, that too will meet some of our concerns,” he said.
The private sector leader said he was hoping the medium-term strategies would be agreed long before the end of this calendar year and would start having “some effect”.
Another major concern for the private sector, including the Barbados Bankers Association and the Barbados International Business Association (BIBA), was how the new two per cent fee on foreign exchange transactions, also announced in the May 30 Budget, would be applied.
Herbert said Sinckler assured the private sector that the Central Bank would issue details of how it would operate.
“This addresses our main concern that it should be on net foreign exchange purchases and not gross foreign exchange purchases. This addresses the main concern the offshore industry had,” he said.
This means that whenever the offshore sector brings money into the country that has to go back out it would not attract the charge, he explained.
“It also means that a local manufacturer that exports will be able to use their export earnings to offset their foreign exchange purchases,” Herbert added.
However, the business executive said the private sector remained concerned that closing the fiscal gap by a revenue raising method would make the country less competitive.
“If these measures are made more short-term then that may not be a long-term issue. But we are concerned about that and we are particularly concerned, and the minister agrees, that these are going to be harsh measures on the population.”
Following a meeting with Sinckler this evening, BIBA President Gregory McConnie told Barbados TODAY he was eagerly awaiting the guidelines from the Central Bank on the two per cent tax, which is expected to be issued before the end of this week.
However, McConnie said the international business sector was still keeping a close eye on work being done by Government to make it easier to do business here.
“There is still work to be done there. That is not something that can be fixed overnight but it is something we would like to see a lot more attention paid to,” McConnie said.