Minister of Finance Chris Sinckler is stoutly defending the millions of dollars in tax concessions given by Government, saying much has been gained by the island in terms of foreign investment.
“Many people often look at how much money is ceded in terms of revenue [but they don’t consider how much is gained] in terms of the level of economic investment, the level of economic spinoffs, jobs, activity and so on,” he told reporters this morning during the signing of a $30 million loan from CAF, the Development Bank of Latin America, adding that there was a need for “a middle-of-the-road approach to this matter.
“You don’t want to go giving away everything . . . the kitchen sink and everything you have in the country just to attract an investor, but you have to be smart enough to assess the market, see what is going on and look to see where tax concessions granted, or other concessions granted, can be effective in attracting that level of investment,” he stressed.
Against the backdrop of a suggestion yesterday by former Jamaican prime minister Bruce Golding that tax concessions were a “serious danger” to economies, Sinckler insisted that the revenues needed by Government would not have come without the financial inducements.
“Suppose the investor doesn’t invest, or goes somewhere else? You don’t get that activity and you still don’t get the revenue,” he argued, adding that Government would have the “misery” of hearing the same people who are criticizing the concessions saying ‘the economy is not growing and the unemployment is high’.
During yesterday’s discussion on Fiscal Policy and Political Cycles at the 2017 International Monetary Fund (IMF) High Level Caribbean Forum at the Pegasus Hotel in Kingston, Golding said Barbados and other Caribbean countries were losing millions of dollars every year due to the concessions being used to lure investors to their shores.
He said it was almost impossible to wean some businesses off those concessions while suggesting that tax incentives should not be to the detriment of the country’s economy, and the process should be transparent.
“We have some incentives that were put in place from the 1960s when the environment was different. We find that when we give, it is almost impossible to wean the beneficiaries off. So I think a government must have the flexibility to provide incentives where it is important for growth, but . . . it must also be contained so that it doesn’t become a major source of revenue loss,” Golding said.
However, Sinckler singled out Royal Westmoreland and Sandals as two of the more controversial investments which have resulted in major economic spinoffs for the island.
In the case of Royal Westmoreland, he recalled that late Minister of Finance David Thompson had approved the deal which he said has resulted in thousands of jobs and an economic explosion on the west coast.
Sinckler also said that with the signing of the memorandum of understanding with Sandals, over $200 million has been invested in the old Casuarina Hotel on the south coast.
“[Sandals also] bought the land around it with the intention of extending it and are now finalizing the construction of another hotel, which is to the value of another $150 million to $200 million.
“I speak subject to correction, but it is a substantial investment, certainly more than $100 million,” the Minister of Finance said, adding that the Gordon Butch Stewart-led hotel chain was expected to start work on another hotel at the Almond Beach, St Peter site in January next year.
“So on the basis of seeing what was in Barbados, seeing what they had before in terms of the concessions offered, they put their monies where they mouths are,” Sinckler said, while pointing out that 1,000 workers were hired by Sandals during its construction phase, with 500 people finding permanent employment.