President of the Small Business Association (SBA) Dean Straker is reporting a 20 per cent decline in business since the introduction of the controversial National Social Responsibility Levy (NSRL).
Based on the impact of the tax, which was increased from two per cent to ten per cent on July 1, Straker also said that some businesses have been forced to send home workers, and he warned that if commonsense did not prevail and a decision taken quickly to change how the tax is applied to the manufacturing sector, more workers could soon be joining the breadline soon.
Although Straker could not say exactly how many workers had gone home, he told Barbados TODAY there was no doubt that the tax was taking its toll on the sector.
“Sales are generally down anywhere between 15 and 20 per cent since July 1 and we anticipate that things could get tougher coming down into October . . . certainly people are feeling it,” he said.
“It is obvious that if your revenue is down 15 to 20 per cent, the only way you can tackle it and deal with it on your own is to start looking at your expenses, and your expenses are going to impact on employees. That is where you are going to have to go. You are going to have to trim your staff, and already yes, some people have started doing it,” he said, adding that some companies simply could not hold on any longer.
Since the announcement of the tax by Minister of Finance Chris Sinckler in his May 30 Budget, private sector operators have been complaining that they could be forced to let go staff or go out of operation.
Some have also warned customers of possible price increases, given that the situation was compounded by the introduction of a two per cent levy on foreign exchange transactions, as well as a hike in fuel charges.
However, despite several meetings on the issue and strident calls for a reversal of the onerous tax measures, which formed part of a $542 million tax package, Government is still not budging.
It has been insisting that the private sector, as well as local trade unions, which came together back in July to stage a march against the NSRL that attracted 20,000 people, should give the tax some time to work and allow for a review at the end of September.
However, Straker said local manufacturers were finding it hard to cope with the NSRL, which is applied to all imports at the border and to the production cost of goods used by the sector.
Suggesting that the way in which the tax was being applied to locally produced items was “unjust and unfair”, the SBA spokesman warned that “a number of things need to be worked out and worked out quickly.
“The fact that manufacturers in Barbados are being treated differently to anybody else . . . makes producing things locally very hard to be competitive with imports. So this is what we need to be addressed,” Straker said.
He made it clear that local manufacturers were not against paying the NSRL, but “they are against paying the NSRL at the end of the assembly line and being asked to pay it on everything that goes into making that product”.
Straker also said in some instances the Barbados Revenue Authority was not calculating the tax payable in the same way as the companies.
“Accountants will tell you one thing and Barbados Revenue Authority will tell you something else. Our understanding is that BRA has told us the production cost is everything except your markup. So that is significant,” he said.
“So what I had asked for is a clearly outlined policy from Barbados Revenue Authority saying what they expected, all the line items that they expected to be contained in your production cost. So far, we haven’t got that and what’s happening is that manufacturers are treating it in their own way,” he said.
“Therefore I am saying, outline a list of the items of what you expect to make up in the production cost so that everybody is on the same page or just come straight out and say, ‘we expect production cost would be 50 per cent or 40 per cent of your sales’, some definitive thing so that everybody can follow,” Straker suggested.