A day after thousands marched through the streets of The City in protest of Government’s failure to hold dialogue on the recently increased National Social Responsibility Levy (NSRL), Minister of Finance Chris Sinckler Tuesday approved tax relief of a different kind.
Monday’s massive demonstration was led by the private sector and the island’s four major trade unions which have been pressing for an immediate roll back of the recent hike in the NSRL, which increased across-the-board from two to ten per cent on July 1, except on the local agriculture and tourism sectors and Government’s pre-approved National Basket of Goods.
Without making any reference to the dreaded NSRL or Monday’s protest which is yet to yield the desired result from Government, Sinckler tabled an amendment in Parliament that will exempt all small businesses earning $200,000 or less from paying Value Added Tax (VAT).
Under the VAT Amendment Bill 2017, the tax threshold is being increased from $80,000 to $200,000.
He told Parliament that after reviewing the recent International Monetary Fund (IMF) tax reform study, local tax experts, business analysts and others — including the Social Partners — had looked at the recommendations and agreed to raise the threshold.
“Now what does this mean? It means, Sir, that once we amend the Act for that purpose, it means that a lot of small business people in Barbados who are currently now having to battle through dealing with all the paperwork on VAT, would not now have to do that so long as they do not surpass that threshold of $200,000 of business being undertaken within a single reporting period for the year in terms of their annual accounts,” he said, adding that this should give them an ease in terms of the amount of money they need to set aside for administrative matters and allow them to better manage their cash flow.
“It also, in some instances, and in fact, many instances, pulls them out of the process of having to do VAT refunds, which of course is a major issue for the Government relative to the availability of sufficient resources to be able to as quickly as possible, process and have VAT refunds paid to a number of small businesses in Barbados who frankly require and rely on those resources to be able to have their cash flow and to do what they have to do,” the Minister of Finance said.
He did not say precisely how many small businesses stood to benefit from the move, but acknowledged that small business operators may still be charged VAT in relation to production and manufacturing inputs into their operations. In such any event, he said, “the business person can then claim back from the consumer in their prices”.
With the amendment to the VAT legislation, Government is also aiming to clean up the current basket of VAT exempted goods, by validating changes made in the 2015 Budget in which some 100 products were removed from the list of 400.
Tuesday Sinckler pointed out that about 30 per cent of items on that basket were bought in every supermarket by Barbadians. He noted that one unfortunate issue with the basket, which is designed for the lower income Barbadians, was that it was also accessible to the wealthy under the current universal system.