Newly elected President of the Barbados International Business Association (BIBA) Marlon Waldron is suggesting that Government allowed some international businesses to slip through its fingers six years ago, losing US$60 million in corporate taxes in the process.
Speaking on Friday at a BIBA organized international business update seminar at the Savannah Hotel, Waldron charged that the Freundel Stuart administration was slow to react when companies began leaving the country for other jurisdictions as a result of changes in Canadian tax laws.
“As a result of the relocation of four of those companies, Barbados lost about US$60 million in corporate taxes. One of the four companies that re-domiciled actually engaged the Government requesting a solution. Needless to say, there was none given in a timely manner and that company left Barbados. That was the point at which we should have intensified our efforts in the marketplace,” Waldron told those gathered for the seminar titled What Businesses need to Know about Base Erosion and Profit Shifting (BEPS) and Double Taxation Treaties.
He said once the signs were there that some of the businesses would leave, the authorities ought to have spent additional financial and other resources on the development of the sector because of its contribution to the economy.
In fact, Waldron questioned why Government spent as much as it did on tourism, when compared to the international business sector, which contributed approximately $1 billion to the economy, “but somehow the amount allotted to its promotion and development is a mere $8 million annually while the tourism promotion is allocated over $100 million”.
Waldron recalled that Minister of Finance Chris Sinckler and Acting Governor of the Central Bank Cleviston Haynes had made reference to the reduction of revenues of $1.4 billion over the last nine years, “and has placed that shortfall on the doorsteps of international business and financial sector”.
He said while some might see this as blaming the sector for the state of the country’s economy, he saw it differently.
“I take it in a very positive light. I see it as at last a recognition of the immense importance of international business to Barbados and a very viable contribution it has been making over the years.
“We are asking the powers that be now that country is aware of the impact of international business to our economy, to reconsider the disparity so that international business can reach its full potential and to make the contribution we know that it can make to the revenues and foreign reserves,” he said.
Waldron said while he was pleased with Government’s efforts to engage the private sector through a recent meeting, there was still a level of anxiety among the international business community regarding the current state of the economy and the low levels of reserves, which stood at 9.7 weeks of import or $635.5 million as at the end of June.
He said a major part of the challenges remained the lack of ease in doing business, therefore no effort should be spared in placing resources behind improving the situation.
Minister of International Business Donville Inniss agreed that the sector was critical to the economy, while pointing out that some changes had been made, including a lowering of the tax rate to maintain business here in 2011 when the country ran the risk of losing some major Canadian-based firms.
“But it would be wrong if anyone today seeks to give the impression that the international business sector has been responsible for the state of macro-finances because when we took that decision in 2011 it was with the expectation that the revenue would fall and it has fallen as predicted,” Inniss said.
“I think what we need to do is to redouble our efforts to get the revenues back up, not just in this sector but certainly from businesses on the whole,” he said, adding that the sector continued to grow despite the challenges.