UPP slams VAT on online transactions

Government’s decision to amend the Value Added Tax Act to allow for the 17.5 per cent tax to be collected for online transactions, has received a thumbs down from the United Progressive Party (UPP).

In a statement released this afternoon, the UPP contends that the tax will only serve to hurt small businesses while getting consumers tangled in Government’s new revenue collection dragnet. The UPP is also concerned that Government is unnecessarily outsourcing “sensitive” aspects of its revenue collection.

“This tax comes within the context of the fact that the persons who have benefited most from online purchases, are small businesses. It is because of the direct access to markets for the purchase of inputs into the creation of local goods and services that many small businesses have been able to thrive in a rather challenging economic climate,” the UPP argued. The party questioned whether the move was designed “to destroy these creative businesses in order to satisfy the larger businesses which play the role of wholesaler”.

The three-year-old party is of the view that due to the limited purchasing power of small businesses, the online tax is inherently discriminatory to those enterprises.

“It seems clear that this VAT will discriminate against small businesses in its application. It is not clear why those businesses which buy goods from platforms such as eBay and Amazon are being forced to pay this VAT upfront, whether the item is exempt or zero-rated, [only to later] queue for a refund. VAT-free computer equipment for all is another initiative that seems to now be undermined. Businesses, which are able to buy in bulk from suppliers, other than through e-commerce platforms, would be exempt from this additional burden,” the Lynette Eastmond-led party pointed out.

The UPP also accused the Barbados Labour Party (BLP) Government of attempting to privatise some of the functions of the Barbados Revenue Authority (BRA), which could have been undertaken in house with the right technology.

“This seems to be an effort to privatise the more lucrative aspects of the Government. The BLP proposes to hire companies and or individuals to collect the online tax. There is no reason that with the right technology BRA could not undertake these collections. The UPP wishes to understand why this BLP administration is choosing the most sensitive features of the Government to consider for privatisation,” the statement queried.

The political party went on to demand further clarity from Government regarding the cost of getting online companies to alter their platforms in order to facilitate the collection and passing on of VAT.

The statement noted, “Based on the VAT Bill, it would seem that this administration believes that it has jurisdiction over foreign companies such as Amazon and eBay to cause them to modify their platform for the collection of taxes on behalf of the Barbados Government. The UPP needs to know what Government would be paying these processors to collect VAT on its behalf… Why is Barbados imposing multiple taxes on the same taxpayers in increasingly complex forms?”