Three months after Government increased the controversial National Social Responsibility Levy (NSRL) from two per cent to ten per cent, Bridgetown businesses say there has since been a drastic decrease in sales, with car companies among the worst hit.
Minister of Finance Chris Sinckler revealed in Parliament on Tuesday that the NSRL had raked in $50 million in the three months since it was raised effective July 1, on target with his own expectations when he announced in the May 30 Financial Statement and Budgetary Proposals that the levy would rise.
Sinckler also said after the Barbados Revenue Authority counts the additional Value Added Tax earned on the NSRL the final intake would be even higher.
However, local businesses said unlike Government they – and consumers – had no reason to celebrate.
“We at Abed’s have definitely seen a decline in sales primarily because the NSRL has added to the cost, and as a direct result prices have gone up,” Eddy Abed, the owner of the popular fabric store Abed’s told Barbados TODAY, adding that while the tax had become a worrying issue for businesses, the Freundel Stuart administration was likely to keep it for the foreseeable future.
“We were told that this was supposed to be a temporary tax. My feeling is because it is bringing in this amount of money it may be part of the landscape for a time to come, and that really concerns me.”
Abed, who also heads the Barbados Chamber of Commerce and Industry, stressed that the contentious levy had caused a strain on the private sector.
He repeated the business community’s previously stated position that while Government had promised it would not lay off any more public servants, the jobs of private sector workers were being placed in jeopardy by the NSRL.
“Although the minister, by adding the NSRL assured that public servants won’t be going home, he has shifted that responsibility to the private sector. We are seeing many of our members in the process of about to send home staff and closing branches and downsizing. This wasn’t intended, [but] we can’t employ people with a tax so burdensome.
“From the chamber’s point of view, many of our members have also informed us that they have seen a tremendous fall-off in business. Those selling cars have said that July, August and September were the worst months for them. Sales were down 50 per cent and this has made the cost of living much higher,” the businessman said,
With the department store Woolworth in the process of replenishing its stock, Managing Director Martin Bryan said prices had increased by at least ten per cent, resulting in less spend by consumers.
“As we are currently down restocking and getting new shipments in, [and] everything has definitely gone up. Prices have increased roughly ten per cent across the board. Everything new that has been coming in is about ten per cent more than it was two months ago,” Bryan said.
“The customer spend has not been what we are accustomed to. There are a lot more discerning customers out there, so we are seeing less traffic in the store and less spend per person, which would indicate that they are certainly going about their shopping strategically.”
The NSRL was introduced last September at two per cent of the customs value of imported and locally produced goods, raising concern among businesses and consumers alike.
It caused even further consternation when Sinckler announced in the May 30 Budget that the levy would rise to ten per cent, as part of tax measures to shrink a $340 million deficit.
Back then private sector representatives predicted skyrocketing prices and even some closures.
Bryan is hoping the falling sales were not portents of things to come this Christmas.
“Bajans like Christmas. Our buying in terms of what Bajans like at Christmas – decorations and toys – we are going to look very carefully at our pricing. I think the ten per cent has hit everybody in their pockets and everybody is going to be fighting for that reduced spend. We anticipate and are hoping for a relatively good Christmas,” he said.
Around the corner at Cave Shepherd, Area Retail Manager Beverley Belgrave revealed that sales were at an all-time low in July, blaming the NSRL.
In fact, Belgrave said the Broad Street store had yet to reverse the decline, as the fall-off in shoppers and spend continued.
And like Bryan, she was keeping her fingers crossed that business would turn round come Christmas. .
“I am hoping that the holiday season will be a better season for us since we love Christmas,” the Cave Shepherd executive said.
“The reality is that prices will be more than last year. We are hoping that people will still come out and shop,” Belgrave added.