Despite protests by the labour movement, the private sector and Barbadians on a whole, the much-criticized National Social Responsibility Levy (NSRL) is proving to be a cash cow for the Freundel Stuart administration.
Minister of Finance Chris Sinckler today revealed that the controversial tax had raked in $50 million in the three months since it was raised effective July 1, exceeding even his own expectations when he announced in the May 30 Financial Statement and Budgetary Proposals that the levy would rise from two per cent to ten per cent.
“I believe the figure so far is just short of $50 million, which, if you were to multiply it by the four quarters, would give you just around $200 million [for the year],” Sinckler told Parliament as he introduced the National Social Responsibility Amendment Bill 2017, giving the increase legislative teeth, and listing items that would be exempt from the onerous levy.
In addition, the minister said, the final intake would be even higher after the Barbados Revenue Authority counts the additional Value Added Tax (VAT) earned on the NSRL.
“That is only on the NSRL component. There is a VAT component to the NSRL,” he said.
The NSRL is calculated on the customs value of imported and locally produced goods.
The levy is applied on the production cost of locally produced goods and VAT is added to the total cost, inclusive of the levy.
“The [Ministry of Finance] staff are now receiving the final filings from the Customs Department on the values on the import component of the VAT to parse out or separate what would have been the increase in that VAT for the period July, August and September to . . . pull that out, add it to the NSRL proper and then you get the full figure,” Sinckler said.
Local manufacturers have cried that the application of the levy placed their products at a disadvantage, with goods made in Barbados becoming more expensive than imports from countries such as China and Thailand.
Garment manufacturers, for example, reported a drop
in sales in August, which they blamed on the taxing NSRL, the application of which they pleaded with Stuart to reconsider.
The trade union movement and the business community are also united in their opposition to the levy, having organized a joint anti-NSRL protest march in July, which attracted an estimated 20,000 demonstrators.
However, as complaints continue about its impact, Sinckler said the levy was performing “close to what we projected net of these concessions, or the exemptions”.
In fact, the projected haul of $200 million for the financial year will surpass the amount of revenue Sinckler had anticipated when he announced the rise in the May Budget.
Back then he said he expected the levy to rake in $186 million, with another $32 million in VAT.
The rise in the NSRL, was part of a series of taxes, including hikes in duties on petrol and the introduction of a two per cent tax on foreign exchange transactions, aimed at raising $542 million to help Government close a massive fiscal gap.
Meantime, according to a schedule of the bill, which was approved by Parliament today, goods already exempted under the VAT Act, as well as kerosene imported for use as airline fuel; heavy fuel oil (Bunker C); drugs imported or purchased out of a bonded warehouse, or drugs bought here through the Barbados Drug Service; and goods imported or purchased out of a bonded warehouse by an international business company will not attract the NSRL.