There is a level of discomfort among manufacturers who are nervous about the possible impact on their businesses of some of the taxes announced earlier this month by Prime Minister and Minister of Finance Mia Mottley.
They are particularly concerned about two of the levies, the gas tax and Garbage and Sewage Contribution (GSC), which they predict will lead to an increase in operational costs.
Executive Director of the Barbados Manufacturers Association (BMA) Shardae Boyce said while manufacturers had yet to determine how severe the impact would be on their operations, they were uncomfortable, though optimistic.
At the same time, while the manufacturing official was unable to say if the taxes would result in increase in prices to consumers, she said the BMA would work closely with manufacturers in the coming weeks to determine the impact.
“As it relates to the fuel cost and the tax on water, we are expecting that there will be an impact. What we will be doing over the next couple of weeks as soon as the taxes are implemented, is to work with the manufacturers to monitor exactly what are the effects,” Boyce said.
“Right now all I can say is that members are indicating that it would have a likely impact on them and they are uncomfortable, but they remain optimistic,” she added.
In the June 11 mini-Budget, Mottley announced that effective July 1 the road tax would be scrapped and replaced by a tax at the pump of 40 cents per litre on diesel and gasoline and five cents on kerosene.
In addition, Mottley also announced that effective August 1, businesses would be required to pay a new Garbage and Sewage Contribution levy equivalent to 50 per cent of their water bill. This charge will be paid through the Barbados Water Authority.
BMA President Robert Noel said manufacturers were expecting an increase in their operational costs as a result of the new measures.
“For the manufacturing sector in particular, we are expecting a rise in operational costs, which may affect our competitiveness. However, we will be working with our membership to determine how any adverse impact of the taxes can be minimized,” Noel said.
The Mottley-led administration has been receiving some push back from privately run public service vehicle (PSV) owners and operators, who complain that the gas tax will send the cost of doing business skyrocketing.
The Association of Public Transport Operators and the Alliance Owners of Public Transport said expenditure for route taxis would jump to $6,741 from $2,250, while minibus operators would have to fork out $10,861, up from $3,625.
“It is unquestionably wrong for a Government to force private entrepreneurs to subsidize public transportation out of their own pockets and this aspect of our operations needs to be addressed immediately if the sector is to be in a position to continue to offer service to the travelling public come July 1,” the two organizations said in a joint release.
Hoteliers have also complained that the GSC would push their water bills up to a whopping $60,000 a month, up from $40,000, prompting Mottley to hint at the possibility of a review of the process with a view to implementing a cap on payments.
The BMA did not present as detailed an analysis of the possible impact of the Budget as that presented by the PSV owners and operators or the hoteliers.
This notwithstanding, Boyce said now was the opportune time for the sector to reposition itself and grab hold of available opportunities, including grants and loans, in order to innovate and make their operations more cost effective.
In that regard, she said the BMA was in the process of putting together a series of workshops to help manufacturers take advantage of any available assistance.
“When you think innovation you automatically think manufacturing – making something that is different – and I think that right now what the sector is doing is looking to see how it could position itself, and a lot of the bigger players in the game are coming forward to help smaller manufacturers,” she said.
“One of the things the manufacturing sector always look to do – and we have to do if we are looking to export – is to build capacity. And that is one of the things manufacturers and the BMA will be concentrating on developing programmes around,” she added.