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Tax collection shortfall

by Marlon Madden
3 min read
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Government continues to encounter some stumbling blocks as it seeks to implement a number of tax measures that have been delayed for about a year.

However, Central Bank Governor Cleviston Haynes has reported that other taxes that were implemented successfully have been contributing favourably to Government’s revenue.

Delivering his economic review for the first nine months of this year today, Haynes reported that Government saved about $64 million in transfers due to revenues generated through the Garbage and Sewage Contribution (GSC), Airline Travel and Tourism Development Levy and the Health Service Levy.

He pointed out that for the first six months of Government’s fiscal year, which began in April, the fuel tax netted about $38 million, the Airline and Travel Development Levy raked in about $38 million, while the GSC netted about $34 million and the Health Service levy another $30 million.

He said as a result of those funds raised, the pressure on Government finances had witnessed an ease, adding that they were going towards funding some of the major users of Government transfers.

“We were able therefore, to reduce our transfers during the first six months because of the revenue from these earmarked taxes that we have been able to generate,” said Haynes.

He could not immediately say if the taxes met or exceeded expectations, but said the collections were “within the ballpark”.

“They are within the range of the targeted amounts. So generally those taxes have performed well. The Health Service Levy and the Fuel Tax are easy to collect. So one of the things is that they meet the criteria of efficient taxes because they are easy to collect,” he pointed out.

However, after a year Government is still struggling to implement the tax on online transaction, which has witnessed several delays, the shared accommodation levy and the gambling tax.

Haynes said the delay in those revenue-raising measures had tempered Government’s fiscal operations.

Without providing details as to the concerns, he explained that a part of the delay in the new online tax had to do with ironing out concerns of those overseas who would be involved in the collection of the tax.

That tax is to be set at 17.5 per cent.

“You have to deal with both the vendor and those who would be collecting the tax on your behalf. I think there are still some issues we are trying to sort out in terms of that process and how that process will actually work. Naturally these vendors are not residents in Barbados and we have to be able to resolve any issues of concern they may have in the process before we can go towards implementation. That is the major one,” said Haynes.

In relation to the gambling tax, which was set at 20 per cent on all gambling winnings, Haynes said, “a part of that [implementation] has already started but not complete in terms of what Government would have hoped for at this point”.

“Fortunately the overall fiscal position has been strong enough to withstand the delayed start to these taxes,” he added.

Gambling establishments also have until January 1, 2021 to change their slot machines to auditable ones, when a 17.5 per cent tax on the net-drop of all gaming establishments is to take effect.

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