Pressure is mounting on the Freundel Stuart Government over the controversial National Social Responsibility Levy (NSRL), with manufacturers joining the growing calls to scrap the burdensome tax.
President of the Small Business Association (SBA) Dean Straker did not mince words Friday as he described the levy as “unfair” and “the surest and quickest way to wipe out” the manufacturing sector and the workers employed in that sector.
“The SBA already sees the imposition of NSRL on manufacturers as an unfair tax. It is disturbing that the members of our Government could agree to this tax on manufacturers who are already struggling to survive and compete against imports,” Straker told journalists at a press conference at the SBA’s Harbour Road, St Michael headquarters.
The NSRL was first imposed last September at a rate of two per cent of the customs value of domestically manufactured goods and on goods imported into Barbados.
It skyrocketed to ten per cent effective July 1, as part of an austerity Budget presented by Minister of Finance Chris Sinckler aimed at raising $542 million to close a gaping fiscal deficit.
According to Sinckler, the increase will result in “increased revenue of $291 million for a full financial year and $218 million for the remaining nine months of the current fiscal year”.
Goods imported for manufacturing, tourism and agriculture are exempted, a decision that strikes Straker as unfair, particularly the exemption to the tourism sector, which he described as a disservice to local manufactures.
He argued that the manufacturing sector had been placed at a disadvantage as hoteliers who received duty-free concessions would favour imported products over the heavily-taxed locally manufactured items.
Straker contended that Government was slowly killing the struggling industry by asking them to charge consumers a ten per cent levy on locally made items.
“Manufacturers have traditionally responded quickly to any downturn in business because the margins are low and any delay in cutting cost will result in closure. It is my firm belief that this tax on manufacturers, if it remains, is the surest and quickest way to wipe out both the workers and the businesses in the manufacturing industry,” he stressed.
His sentiments were shared by Chief Executive Officer Lynette Holder, who said the tax was a bad idea in the first place.
“Maybe the NSRL has been ill-advised . . . . The introduction of it might very well have a deleterious effect on business in Barbados and therefore it ought to be reviewed and possibly repealed, because it has the potential to deter and stymie business activity in the country at a time when we ought to be facilitating growth,” Holder said.
The SBA executive advised that in light of the deficit Government should concentrate its energies on how to grow the economy instead of imposing additional taxes.
Even as the small business leaders complained about the impact of the levy, they also described a state of confusion among the membership on how to apply it at the point of production.
Appealing to Sinckler and the Barbados Revenue Authority (BRA) for clarification on how to calculated the production costs under the NSRL, Straker said: “If the industry does not receive this clarification then it exposes us to potential financial loss if the BRA conduct an audit after the fact, and determine that the manufacturer has not calculated the NSRL in accordance with their expectations.
“The result could be the most unjust atrocity ever committed on the small manufacturers of this country.”
The SBA president revealed that since the increased levy took effect on July 1, suppliers have changed their prices almost daily and small contractors have reported great difficulty with receiving quotations from suppliers because of the uncertainty in calculating the NSRL.
The leading trade unions here have already begun a go-slow to protest against the tax, and the umbrella private sector body, the Barbados Private Sector Association, has revealed it was willing to support stepped up industrial action to force Stuart’s hand.