Breaking his silence on the Mia Mottley administration’s tax measures, Owen Arthur has singled out his opposition to some of the attempts to raise money, particularly in the tourism industry.
Stating that he had deliberately stayed silent on the matter for some time, and that he was not about to be critical, Arthur went on to detail his objections, especially taxes on the island’s bread and butter tourism industry.
“The move towards taxing tourism heavily is a reversal of an important policy,” Arthur said in response to questions from the audience during the lecture, which was held under the theme The IMF and the Caribbean: New Directions for a New Relationship.
It was in her June 11 mini-budget that Prime Minister Mia Mottley announced a suite of taxes including three different rates of a new Room Levy on hotel rooms, a 2.5 per cent product development levy on direct tourism services, and a 10 per cent tax on the shared economy.
In addition, international travel will attract a US$70 Airline Travel and Tourism Development tax, while travel within the region will attract a charge of US$35.
“There are things that I did as minister of finance that I thought were the right things to do – when I inherited the ministry of finance there were about 11 different ways of collecting indirect taxes. I said I am going to abolish them and collect taxes via VAT [Value Added Tax]. That is what I did and that helped. I don’t believe that you should have a system where you have multiple taxes and little bits and pieces of taxes, and taxes upon taxes,” said Arthur.
“I don’t agree that you should go back to a situation where you have a large number of different ways of collecting indirect tax. I do not believe that you should have taxes on exports. The Value Added Tax was introduced in Barbados to allow us not to have taxes on exports and investment, but taxes should fall on consumption,” he said.
The former Prime Minister argued that growth and development would come through the expansion of existing enterprise, while suggesting that this would be more difficult if they were being heavily taxed.
In her budgetary measures, Mottley, who is also Minister of Finance, Economic Affairs and Investment, announced that effective July 1, the highest percentage of corporation tax would increase from 25 per cent to 30 per cent, in an effort to raise about $57 million in a full year.
However, Arthur said in order for Barbados to be the most competitive in the region it should have “the best corporation tax”.
“I brought down the corporation tax from 40 per cent down to 25 per cent and down to 12 [per cent] to make Barbados the most competitive economy in the Caribbean from a tax point of view. I would not agree now to carry it back up to 30 per cent,” said Arthur.