One of the most onerous and hated taxes imposed by the former Democratic Labour Party (DLP) administration is one step closer to being a thing of the past.
The House of Assembly today unanimously voted to repeal the National Social Responsibility Levy (NSRL), keeping a campaign promise by the Barbados Labour Party (BLP) to get rid of the dreaded tax should it wrest power from the Freundel Stuart-led DLP, which first introduced the levy in September 2016 at two per cent of the customs duty on locally produced and imported goods, and raised it to ten per cent last July 1.
The National Social Responsibility Levy (Repeal) Bill, 2018 now goes to the Senate, where Government is expected to use its majority to push it through. Once approved by the Upper Chamber, the measure will take effect on July 1 this year, exactly one year after the dreaded increase, which economists and the private sector said helped to virtually cripple the economy.
Prime Minister Mia Mottley was absent from the House – she is attending the 65th summit of heads of government of the Organisation of Eastern Caribbean States in St Lucia – so it was left to Minister in the Ministry of Finance Ryan Straughn to table the bill.
Straughn said the NSRL was the “clearest sign of taxation without representation that we’ve ever seen in this country”.
He echoed an earlier statement by Mottley that while the tax will cease to exist effective the beginning of next month, prices are not expected to fall immediately since businesses already have stock that was subjected to the levy.
However, Straughn said, a reduction in prices is expected in about two months, just in time for back-to-school shopping.
“Therefore, thousands of parents across Barbados will start to feel a slight ease,” he said.
When then Minister of Finance Chris Sinckler first announced the NSRL in August 2016, to take effect on September 1 that year, he said it would raise $142.1 million and the money would go towards financing health care and the purchase of trucks for the Sanitation Service Authority.
“It is the intention of the Government to place the resources garnered from this levy directly towards the financing of critical aspects of public health care in Barbados, particularly, but not limited to, provisioning at our main general hospital, the QEH,” Sinckler said at the time.
“It is also our intention that part of the proceeds of this levy will go towards servicing of the loan which the Government of Barbados has agreed to borrow to provide the Sanitation Services Authority with a fleet of new trucks in the coming months, and to procure much needed parts for the existing fleet. It is our intention to have that fleet back up to above 35 active trucks on any given day by this time next year,” he added at the time.
However, as the country continued to sink deeper into a fiscal hole, and with foreign exchange reserves falling to troubling lows, the administration last year raised the levy to ten per cent, triggering protest marches by the trade unions, workers, private sector employees and other concerned residents, through the streets of Bridgetown.
“Nobody in Barbados benefitted from the introduction of this NSRL,” Straughn said.
Instead, he said last year’s increase led to “the largest increase in the cost of living in such a short space of time up until now than we’ve ever seen in this country”.
“The National Social Responsibility Levy had a disproportionate impact on thousands of low-income people in Barbados because the reality is that everybody has to eat . . . . When you are faced with the supermarket bills because of this National Social Responsibility Levy which is compounded at the end of the process for everything that is done in this country, then that by its very essence increases the cost of living for thousands of Barbadians,” the Junior Minister of Finance stressed.
Warning Barbadians not to expect immediate relief he said this was because “at the moment businesses still have as part of their inventory, stock that would have already attracted the National Social Responsibility Levy [therefore] you would not see an immediate reduction in price simply because of the existing stock in businesses”.
“However, we estimate that the average stock of inventory [will last] somewhere between two months and three months,” he said, adding, “therefore we anticipate that with the repeal of this NSRL that over the course of the summer that people in this country . . . will start to see the reduction in prices because of the reduction of the inventories that those businesses have in stock right now”.
Straughn added that the Mottley-led administration would work “to make sure that the cost-savings are passed onto consumers”, while giving the assurance that “the business community have given a commitment that they’re in this together to rescue Barbados”.
“There is no room for perceived price-gouging,” he said.