Government’s decision to raise processing fees for packages coming through the postal service by 660 per cent, should be cause for concern in the small business community, a respected economist has warned.
University of the West Indies lecturer in banking and finance Jeremy Stephen contends that the hike in user fees from $1.50 to $10 was discriminatory against small businesses which are most likely to use the postal office.
The economist further noted that the poor are also likely to be affected, as they often use the post office to have low-cost items shipped to them.
Stephen told Barbados TODAY: “I understand the reason for the fee and that Government wants to go on a user fee basis, but I believe it will impact the cost of doing business significantly on the island.
“This is especially going to be the case for small businesses, not necessarily the larger ones.
“It really can be reviewed as a regressive tax on small businesses because of lower volumes that they bring through the post office per week.
“So that would be an increase in cost to customers, contributing to the already abysmal inflation we are facing in a slow economy.”
Stephen called on Government to clarify whether the new fee would be for each item processed.
The economist further warned: “For small businesses and poor people this can result in a contraction of consumption.
“Maybe that is part of the general plan, but it shouldn’t be if you are promoting business growth.
“Maybe it is isn’t intended, but it is discriminatory towards larger businesses who would not use the post office to import the inputs for their businesses.”
The Postal Service announced that effective January 20, the cost of the Advice Fee for processing all parcels and letter packets at the post office would be increased. This prompted a response from consumer advocate Malcolm Gibbs-Taitt, who argued that the hike was onerous, adding that “poor people just cannot afford it”.
But in defending the Government’s decision, Minister in the Ministry of Finance Ryan Straughn argued: “The reality is that [we need] to come to some reasoning with respect to the fact that the fees being charged by some agencies in Government need to reflect the cost of doing those services.”
He declared that the changes in fees were necessary to allow Government to “better deliver the service that the people want”.
He suggested that if those fees were not changed over time then it would most likely come in the form of more taxes.
Barbados TODAY contacted Minister responsible for Small Business Dwight Sutherland who promised to comment on the issue after further dialogue with Cabinet colleagues.
Stephen pointed out that the move should come as no surprise, suggesting it was par for the course in the current IMF-sanctioned budget austerity, during which state-owned services must pay their own way.
He added: “State-owned enterprises such as the post office were a drag on public financing and everybody agreed that it was time to go to the IMF.
“So for the last two years, the Government has been pushing fees, such as in the case of the hospital, which they claim is self-sustaining at this point.
“The same goes for the airport and there are other examples.
“One could argue that they could have sent home persons but that may have had a lot more repercussions in the short run.”
colvillemounsey@barbadostoday.bb
