Businesses that are being asked to pay the new Pandemic Contribution Levy should do so with pride, Minister of Labour, Social Partnership Relations and the Third Sector Colin Jordan insisted on Monday.
There have been concerns raised within the private sector about the 15 per cent tax that will be applied to businesses that had a net income of over $5 million in 2020 and 2021, with payment starting from July this year until March 2023.
However, speaking in the House of Assembly on Wednesday in response to the budgetary proposals outlined by Prime Minister Mia Mottley two days earlier, Jordan said the businesses that will be subject to the tax – those in telecommunications, retail sale of petroleum products, commercial banks, and general and life insurance companies – should welcome the opportunity to give back to the country.
“That one-off contribution should be embraced by those organisations to which it is targeted as their contribution to this country, not a contribution to the Government. That 15 per cent of net profit, not 15 per cent of revenue… that contribution should be seen as a contribution to this country, the country in which they operate,” the Labour Minister said.
He defended supermarkets which were often accused in the height of the COVID-19 pandemic of profiting heavily from often desperate consumer shopping.
“Those items that were being purchased during the shutdown period were what we call basics – those were the items that attract the lowest level of mark-up in a distribution context. So while they have been busy, it is not the same as organisations operating in the insurance space or the telecoms space. It is not the same as the commercial banks,” Jordan said.
He stressed that businesses that recorded large profits should see it as their responsibility to assist the island during this testing period.
“Those institutions must recognise that we just came through and are still going through a pandemic. I am not sure where some of those [business] leaders are living but it can’t be overseas, because the pandemic by definition is global, and so they must recognise that they have a responsibility to the society within which they make their profits,” Jordan said.
He added that the tax which can be paid in eight monthly installments beginning July 15, only tapped into businesses’ profits and would therefore not be an excessive burden on their usual operating costs.
“The imposition suggests that if your business was so bad that you made no profits, then 15 per cent of zero is zero, there is no additional burden,” he said.
The Minister also dismissed concerns raised by private sector leaders about the retroactive nature of the tax.
“The matter of if it is retroactive or not is, in my view, slightly laughable, and so I won’t even attempt to address it, but the philosophy of burden-sharing goes beyond that because the burden is not only falling on those companies. People who earn above a certain amount, also have to contribute,” he said, referring to the fact that individuals earning above $6 250 per month or $75 000 annually will have to pay the Pandemic Contribution Levy as well, at a rate of one per cent of their income, starting April 1, for 12 months.
“Our philosophy is that the burden needs to be shared.” (SB)
