Minister of Agriculture and Water Resource Management Dr David Estwick is convinced Government will achieve its revenue target from the two per cent tax on foreign exchange transactions despite a delay in the implementation of the levy.
In a statement on Wednesday, the Central Bank of Barbados said the measure, which was part of Minister of Finance Chris Sinckler’s May 30 Budget, would no longer be rolled out on July 1 as previously announced, but would now be implemented in two phases beginning with its application to cash, bank drafts and wire transfers on July 17, 2017.
It also said credit, debit and travel card transactions would become subject to the fee from September 1.
The postponement has already drawn criticism from some quarters, including economist Jeremy Stephen, who argued that not only was it unlikely that the administration would meet the target of $542 million in taxes by the end of the financial year, but it meant an even longer period of austerity for Barbadians.
However, Estwick Thursday dismissed those concerns, arguing the naysayers were not taking into account the possible bump in foreign exchange transactions from upcoming festivals such as Crop Over and the Caribbean Festival of Arts (CARIFESTA) to be staged here in August.
“You have a situation where you have a lot of festivals, which means there are going to be clumped and enhanced transactional activities between CARIFESTA, Crop Over and others. Therefore, your evaluation mathematically has to take these things into consideration,” the minister said in response to a question posed by Barbados TODAY following Thursday afternoon’s launch of the ministry’s new e-platform for registered agricultural producers and buyers.
“My understanding tells me therefore, that one can still achieve the goal even though you have a shorter tenure because you have clumped transactional activity coming on stream very soon. So maybe the Minister of Finance and the Central Bank were considering this fact.”
During debate on the austerity budget, which also included the onerous ten per cent National Social Responsibility Levy on imported and locally produced goods and increases in the excise duties on petrol, Estwick had taken exception to the measures, warning his own administration that it simply could not “tax its way out” of its economic problems.
The minister, who would go on to vote in favour of the measures, Thursday insisted he had not changed his position that Government could not remedy the economy “on taxation and expenditure consolidation alone”.
“It is not the strategy, but when you apply the strategy . . . and whether it is enough to deal with the problem that you have at hand,” Estwick said.