The island’s private sector is warning consumers not to expect an immediate fall in prices after Government removes the hated National Social Responsibility Levy (NSRL) on imported and locally produced goods.
President of the Barbados Chamber of Commerce and Industry (BCCI) Eddy Abed, who yesterday joined the Social Partners in talks with Prime Minister Mia Mottley, said he was confident the newly-appointed leader would keep her campaign promise to repeal the onerous tax.
However, Abed cautioned that it could be up to five months following the repeal before prices begin to fall.
“Therein lies the problem because although the NSRL may be repealed today the adjustment of the prices would only occur when the inventory is replaced. One must be realistic,” he told a news conference at the offices of the Barbados Investment and Development Corporation (BIDC) where the private sector body signed a memorandum of understanding with the BIDC to increase collaboration over the next two years.
It was in his 2017 Budget presentation that then Minister of Finance Chris Sinckler announced a 400 per cent rise to the NSRL introduced the previous September – from two per cent to ten per cent of the customs value of imported and locally produced goods – as part of an austerity package as the administration sought to curb a burgeoning deficit problem.
During the campaign for the May 24 general election the BLP pledged to repeal the tax, a decision Abed said would cost the Treasury $141 million which “will have to be made up somehow”.
The BCCI head said the private sector and the labour movement had been tasked to come up with a means of making up for the shortfall.
“We have been asked as part of the private sector association and the trade unions, to give suggestions as to how the shortfall in revenue will be made up,” said Abed, who refused to give details, only adding that “surely it will be made up”.
Asked how businesses would be kept in check once the tax was removed, Abed suggested that competition would take care of that.
“There is nothing more wonderful than competition, frankly. If you are prepared to lose market share or if you are prepared to get the wrath of irate customers going on social media then I say to you, carry on,” he said.
The BCCI head said now that the general election was out the way there was a general “feel good” atmosphere within the business community with some indicating that the “dark clouds have cleared”, despite the continuing economic problems.
“The reality is that we are still in the same mess we were in before. We may have a new driver driving the bus but quoting from our new Prime Minister ‘many hands make light work’. This is a job that will require all of us to participate in,” Abed said while describing the economic situation as sad, and calling for urgent implementation of the necessary corrective steps.
“So from that point of view I think people are a little resistant. They would like to get a greater sense of the short-term measures that will be implemented and the medium and long-term measures as well, and that causes a bit of hesitance.”
However, he said many businesses had made it clear they intended to proceed with some of the plans they had placed on hold for at least the last six months.
“I fully expect not necessarily within a day or week, but within three to six months, you will see activity. I am absolutely certain that we will see activity,” he insisted.
The business executive said that in addition to the struggling economy the lengthy wait for the general election to be called was a main reason for the lack of confidence and uncertainty which led to little or no investment.
However, he said with a new Government in office, confidence was returning.
“People want to have a greater sense of how things will be solved. We are all aware that there will be some pain but it must be gain with that pain. It can’t just be pain,” he said, adding that businesses were aware that a lot of work had to be done in order to turn things around and protect the value of the Barbados dollar.