SBA EXECUTIVE SAYS LEVIES HINDERING GROWTH
By Jenique Belgrave
The current tax structure is crippling this country’s micro, small and medium-sized enterprises (MSMEs) sector, warns head of the Small Business Association (SBA) Dr Lynette Holder.
“We’ve not seen an increase in direct taxes, but we’re seeing that there’s been no relief either. Barbados is a heavily-taxed jurisdiction, and I strongly believe that the high level of taxation is actually not enabling, but retarding growth in key areas because all the major inputs in business are taxed,” she outlined, in response to the proposals outlined in the recent budget.
Speaking to Barbados TODAY, she lamented that at a time when growth is needed in the economy, the government had not considered the importance of reviewing the tax structure to address those levies proving onerous to the MSME and wider business sector.
“There was no review of the sewage tax that is crippling those in the agri-business and agro-processing sectors who are really reeling from that tax. There is the two per cent Foreign Exchange tax on online transactions and that has not been touched. The Pandemic Levy, we don’t know if that continues post-March. We also have fluctuations with the fuel. The list goes on and nothing whatsoever was said on how we can relieve the tax burden, especially on small and medium enterprises.
“So the budget didn’t go far enough. I felt that there should have been some review on the tax structure for business because 1 000 small and medium enterprises can each employ one person easier than you can get 10 or 20 big businesses in Barbados soaking up that level of employment,” she noted.
In addition, Holder highlighted that with a hike soon to come in electricity rates, the situation will be even more dire for the sector, which can not pass on the costs to customers if it is to remain competitive.
Holder insisted that the budget should also have looked at the lack of legislation, which continues to hinder MSMEs from linking with the credit union sector.
She outlined that with $3 billion in assets, the credit union sector has “significant potential” to provide credit for the MSME sector and to support the work being done, by a Fund Access or by a Trust Fund.
“The credit union sector is inhibited because they cannot easily onboard small businesses as members. We need the legislation to be changed. We need the correct regulatory environment so that they can expand their product offerings to the small business sector. This is done the world over where credit unions provide significant financing to businesses to small businesses in particular to micro firms. For years, the movement here has been asking government, lobbying for a review and amendment to the legislation that is antiquated and outdated, it does not serve the 21st century that we are in,” she said.
Holder noted that with the Fund Access and Trust Fund limited in how much financing they could loan MSMEs, a “marriage” with an indigenous organisation like the credit union will make a significant positive difference to this sector and therefore the wider economy.
She pointed out that currently only two credit unions are allowed to have small businesses as members, but approval had first to be sought from the Financial Services Commission (FSC).
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