Independent senator not supporting ‘unfair levy’

Independent Senator Dr Kristina Hinds is not supporting the position that the Government must convince investors that the Pandemic Contribution Levy is a one-off tax.

Speaking on the Pandemic Contribution Levy Bill, 2022 that was passed in the Senate on Wednesday, Dr Hinds said the retroactive aspect of the tax is unfair and lamented that potential investors do not want to think that they are going to make investments in a country, and then the government can tax their earnings whenever there is an emergency.

“Investors may get a little bit skittish if they believe that they are moving into a place or operating in a place that will go back in time and tax their earnings whenever there is a crisis or an emergency. This is a significant risk and it is one of the risks that the IMF [International Monetary Fund] has pointed out, although for a slightly different reason,” said Hinds who stated that she does not support the measure.

In March, Prime Minister Mia Amor Mottley announced during the 2022 Budget 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, would have to pay the Pandemic Contribution Levy of 1 per cent. The levy takes effect next  month and will be in place for 18 months.

In addition, people 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.

Dr Hinds said that the retroactive nature of the levy introduces a level of uncertainty versus predictability and introduces a feeling of ‘arbitrariness’.

She said even though the levy is an efficient approach, many scholars don’t believe it is fair.

“We know that the cause is a good cause. But as I mentioned previously, there are many causes that can be framed as good and worthy so that the Government has the ability to arbitrarily go back in time and garner some of what persons, corporations, whatever entities have earned, and this can lead to abuse.  I am not saying that this power is being abused now, but it makes it seem as if this is a place where we can and we will use arbitrary measures as needed when there is a problem.

“I do not think that this is right. While I do think that there should be different levels which entities pay based on their ability to pay, I think that this should begin in the present and go forward for a limited time period in order to obtain the same objective,” Dr Hinds said.

The university lecturer and talk show host said that she does not believe that entities tol be taxed should be punished for surviving the pandemic.

“We are operating in an environment where businesses are encouraged to make money. They are not supposed to be punished for doing so. I understand this is not a punishment per se, but it certainly feels that way when you go back in time and do it. So my position here is that this would be much better if it started in 2022, went forward, rather than went into the past. It is not fair,” Dr Hinds said. (AH)