Central Bank Governor Cleviston Haynes has been mandated by Prime Minister Mia Mottley to investigate the issue of bank fees, which are said to be among factors driving the rising cost of goods.
As she rolled out a raft of measures to offer relief to consumers during a national press conference this evening, Mottley made clear that Government will have to tackle the matter though she was prepared to engage in conversations first before introducing legislation.
“What we have learnt is that the move from a flat debit card charge, to a transactional fee, in some instances over three per cent on the transaction, we will have a difficulty because the companies now have to carry that cost in their cost of goods that are being sold as they do their business. This is reflected therefore in their overheads and no doubt it has already been passed on to you.
“So, I have already spoken to the Governor of the Central Bank last night and instructed him to have an investigation and report to the Ministry of Finance on this matter because while we have done some things on fees already it is clear that we have to revisit it and that we have to encourage our banks to recognise that their core business of making money from lending cannot be abandoned for passive income from transactions.
“How can a bank justify charging more to facilitate a digital transaction of $2000 than a digital transaction of 200 dollars or 20 dollars. It is the same mechanism.”
Mottley insisted that she was not picking on banks which she acknowledged were impacted by Government’s debt restructuring and the introduction of the pandemic levy.
Commercial banks, telecommunications companies, life, and general insurance companies, and those engaged in the sale of fuel, that had a net income of $5 million or more in financial years 2020, 2021, or both, are subject to a levy of 15 per cent of their net income.
She however dismissed critics who described the levy as retroactive and unfair, noting it was not new and pointed to other developed countries which have introduced a similar measure.
“Let me say one, it cannot be retroactive when it’s first being charged in July having being announced in March and second its historic base is no different from using a historic base in corporation tax and using a historic base in income tax and using a historic base in many other taxes that are done. And then secondly, we introduce this in March. No later than we introduced it, the United Kingdom introduced a similar type of windfall levy on oil and gas companies and those in the United States of America are considering doing a similar thing.”
The Prime Minister underscored that her Government was guided by the principle, “share the bounty, share the burden, share the burden, share the bounty.
“And if others will make egregious profits at a time when others are sucking salt then we have a duty on this small rock of 166 square miles [to ensure] as many people can continue to keep their heads above water,” Mottley said.
