The Small Business Association (SBA) is confident that some of its members will drop consumer prices as soon as the hated National Social Responsibility Levy (NSRL) is scrapped at the beginning of next month.
“Some people are going to be able to reduce their prices almost immediately and others are going to have to wait for their stock to be depleted because they had already paid the NSRL on it at the port of entry . . . but I would think that for the most part within a month to two everybody would be able to get their prices to pre NSRL,” President of the SBA Dean Straker told Barbados TODAY in an interview on Monday.
This assertion contradicts that which was expressed earlier by the Barbados Chamber of Commerce and Industry, as well as Government, that it could be up to five months before consumers begin to benefit from the removal of the tax, which was introduced in September 2016 at two per cent of the customs value of locally produced and imported goods, and raised last July to ten per cent as the then Government sought to close a gaping budget deficit.
Keeping a campaign promise to repeal the controversial levy, Prime Minister and Minister of Finance Mia Mottley announced earlier this month that her administration would scrap the tax effective July 1, and the House of Assembly subsequently voted unanimously to repeal it.
Straker had reported last September that there was an estimated 20 per cent decline in business since the introduction of the tax.
He said then that some businesses had been forced to send home workers, while warning that if common sense did not prevail and a decision taken quickly to change how the tax was applied to the manufacturing sector more workers would soon be joining the breadline.
Straker could not provide figures but told Barbados TODAY several small businesses had to trim staff over the last year because the onerous tax had eaten into their profits.
“I know it happened within my factory and it happens within a lot of the manufacturers and businesses. So a lot of people held strain for as long as they could, but the bottom line is that the sales went down,” Straker, the managing director of the manufacturing company Barbados Industries Ltd, said.
“If you have a situation where you have sales of X amount and you are barely managing to pay your expenses and then your sales decrease obviously you have to find a way to decrease your expenditure which would have meant trimming and laying off and so on,” he said.
However, with the decision by the Barbados Labour Party administration to repeal the tax in less than a week, Straker said the decision was “a common sense move” with which the SBA was pleased.
“I think it is a common sense move. The NSRL was a very cumbersome tax to begin with,” he said, adding that besides causing prices to increase by up to 12 percentage points, the tax made it very difficult for small businesses to determine their pricing structure.
“We are ecstatic that the NSRL has been removed for more reasons than one. Obviously the fact that it will reduce the pricing to consumers, but also that it is a lot less administrative work on the business enterprises,” he said.
Stating that his company would be in a position to reduce prices from as early as July 1, Straker said it was up to consumers to help businesses reduce their prices by shopping around.
“This is something that people have to monitor. You have to check around because everybody is not going to react the same way.
“Maybe some people will leave their prices where they are because they should have increased their prices from ever since.
“However, as a consumer you need to shop where you can see the price is lower for the same item. So that will make everybody eventually fall in line. If the consumer can stick to looking at the prices and shopping where they see the prices of been reduced everybody will fall in line,” the small business executive insisted.
The SBA president could not immediately say what impact the rest of the mini Budget measures were likely to have on members, but said the organization was expected to review it later this week.