There is a bit of good news for Barbadians in relation to Government’s recently announced austerity package.
Following three days of talks with the private sector, Minister of Finance Chris Sinckler today revealed that the controversial National Social Responsibility Levy (NSRL), which is due to be increased from two per cent to ten per cent effective July 1, will not be applied to the “basic basket of goods”.
“With relation to the NSRL the rates remain the same and yes, it will be onerous to some extent. As we indicated we are looking for ways in which we can shield the more vulnerable persons in our society to ensure they are not impacted too unreasonably by it. That is why we have decided that the VAT basket would not apply to the NSRL,” Sinckler told reporters, adding that staff in the Ministry of Finance were currently preparing the requisite Cabinet paper to that effect.
Back in September, 2015 Government had released its latest Value Added Tax (VAT)-exempted Basket of Goods, detailing a list of zero-rated food items, which do not attract the 17.5 per cent VAT. Based on today’s announcement these items will also not attract the NSRL.
However, without going into details on the items that would be exempted from the tax, Sinckler told reporters there were about 300 basic food items and other items that were zero-rated.
“So in the supermarkets and in the regular shops ordinary Barbadians should not be affected by that. But of course that still has to be approved by the Cabinet, but I don’t think anybody would oppose to that proposal,” he said.
The minister, who had previously announced that the agriculture, manufacturing and tourism sectors would be exempt from the tax, also revealed today an amendment would have to be made to NSRL Act.
“As we had said originally and in the guidance which was given by the Barbados Revenue Authority, the NSRL is on the input costs rather than on the selling price. That is going to be continued because it currently is done on the production cost rather than on the selling price. The legislation seems to have gotten that slightly incorrectly and we are going to correct that shortly.
“What we tell them is to allow the status quo to continue because the status quo is correct,” he added.
Sinckler, who met today with the Barbados Hotel and Tourism Association (BHTA) at Government Headquarters, also confirmed that tourism enterprises that receive incentives under the Tourism Development Act would also be exempted from the NSRL.
BHTA Chairman Roseanne Myers had first announced the exemption during the association’s annual general meeting last week.
Following talks with various stakeholders this week, Sinckler said he was generally satisfied he had been able to clarify a number of their issues.
However, he made it clear that the July 1, 2017 date for implementation of the NSRL would remain, so too the proposed ten per cent rate “unless something radical happens or unless somebody can give us credible alternatives as to how we can get that cash in the short-term to finance Government’s operations.
“I am at a loss, but I am open to suggestions as to how we not do it [implement the tax]. So the rates would remain but we were able to clarify certain things,” Sinckler stressed.
The Minister of Finance also addressed concerns arising from his announcement of a levy on foreign exchange transactions, saying stakeholders were “generally satisfied” with the guidelines given on how the new two per cent charge would be applied.
He also supported a suggestion made by the president of the Barbados Private Sector Association this week that the measures, which are aimed at raising $542 million in revenue and closing the island’s fiscal deficit of $537.6 million would only be short-term.
However, while opting not to say exactly how long they would last, Sinckler said he remained confident Government would still be able to rake in the projected revenue, with the measure due to be reviewed after “a few months”.
He is expected to report to Cabinet tomorrow on the meetings with the private sector ahead of scheduled talks on Friday with the labour movement.
Amid a threat of strike action if the harsh budgetary measures are not withdrawn, a seemingly unperturbed Sinckler today reiterated that while he could not advise the unions what to do, if they did not like the measures they should put forward viable alternatives.
“I think the union and its membership will have to decide what is in its best interest. I can’t advise them as to what is in their best interest. I can advise what is in the best interest of the country,” he said.