Caddle responds to concerns about pandemic tax

A Government backbencher has dismissed concerns about the Pandemic Contribution Levy being retroactive for businesses and being applied at a flat rate for individuals.

Member of Parliament for St Michael South Central Marsha Caddle, who said the measures outlined in the 2022 Budget delivered by Prime Minister Mia Mottley “match the severity of now and the time in which we find ourselves”, suggested the application of the levy made sense and would also prevent its implementation being too complicated.

On Monday, Prime Minister Mottley announced that companies in the telecommunications and commercial banking sectors, the retail sale of petroleum products and general and life insurance, with a net income above $5 million in 2020 and 2021, will have to pay a Pandemic Contribution Levy of 15 per cent. It will take effect in July and run for an 18-month period.

Additionally, individuals earning above $6,250 monthly or $75,000 annually will pay the tax at a rate of one per cent of their income, beginning April 1, for one year.

During a Barbados Chamber of Commerce and Industry (BCCI) post-Budget breakfast forum on Tuesday, regional economic advisor Marla Dukharan said the Pandemic Contribution Levy was reasonable but said applying it to individuals’ earnings above $6,250 was “regressive”.

She also suggested that “the threshold to qualify for this tax should have been higher and should have been structured progressively – meaning a higher tax rate the higher the income level”.

Managing Director and Chief Executive Officer of Goddard Enterprises Ltd, Anthony Ali described the tax as “reasonable to some degree” but expressed concern about the retroactive nature of it, saying: “The reality is that most of us have closed our books for 2021. How are you going to go in and account for this? It’s a nightmare.”

However, speaking in the House of Assembly on Wednesday as debate on the budgetary proposals continued, Caddle said that “unlike what some have observed or suggested that it is a retroactive tax, it is not at all a retroactive tax”.

“It is a one-time levy that has to use some figure as a base, and that base figure has to be the earnings that were made because it is being levied on earnings that were made at a time in the past,” she contended.

“So, I don’t want us to confuse issues and refer to things as retroactive tax when, in fact, it is a single one-time levy that has to use some figure, has to use some baseline, has to make reference to some earnings and these are earnings that accrued during the period of the pandemic.”

The former Minister in the Ministry of Economic Affairs and Investment conceded that there needed to be conversations with the private sector about how to apply and administer the various taxes, adding that attention should be paid to the details and the implementation process should match the ambitious measures.

“There are those who say the income threshold for the one per cent levy is low, there are some who suggest that it should also be tiered so that it should not just apply as a flat rate from $75,000 up but it should apply at different levels as you go up. But we who have been practitioners know about some of the administrative issues of making a tax too complicated. So, I am not too concerned about these details. Our capacity has to match our audacity,” Caddle said.

In referring to the Pandemic Contribution Levy as a “perceived sectorial wealth levy”, Ali had said companies also have to take into account the fact the global minimum tax rate of 15 per cent that will take effect next year.

Prime Minister Mottley had addressed this issue in her Budget presentation as she announced the introduction of the levy on businesses, saying that while she was cognisant of the attempts at implementing that global minimum tax rate, “we are still very much in those discussions and therefore our tax rates remain as they are”. (MM)