With consumers and businesses facing high costs, Government can consider reducing taxation without doing damage to the economy’s long-term sustainability, suggests businessman Lalu Vaswani.
Vaswani, chair of the Barbados Chamber of Commerce and Industry’s (BCCI) customs and trade facilitation committee, made the suggestion yesterday, especially in relation to the two per cent fee on foreign exchange transactions and the rate of value added tax (VAT). He was speaking during a BCCI press conference at Braemar Court, Deighton Road, St Michael.
Vaswani said that based on reports from the Central Bank of Barbados and others, Barbados no longer had a foreign exchange challenge that required the two per cent fee, which he said was a cost for businesses and individuals.
“Our foreign exchange situation is much more comfortable now. So my question is: is it not appropriate that we revisit the necessity of adding a mandatory two per cent charge on every import, whether for business or individuals? That could be lowered,” he recommended.
The former BCCI president also focused on the VAT rate and its impact on increased costs.
“Although the rate of tax hasn’t changed, it remains at 17.5 [per cent], the amount of earnings in taxation that the Government gets is increasing. The question is: can we not revisit that to see the necessity? Because when a previous Government increased it from 15 to 17.5 per cent, it was supposed to be for 18 months,” he recalled.
“I’m just saying that in an overall national context, these are questions that we need to look at. In the same way we look at every administrative process, we need to look at the financial structure of every element that impacts on cost in an objective way, not to cause damage, and to ensure we have long-term sustainability.”
Economist Professor Winston Moore, a member of the BCCI’s economic advisory committee, said it was important to look at the overall macroeconomic situation Barbados faced.
“If you make changes to the fiscal structure, it then has the impact on our commitments in terms of the [International Monetary Fund] Stand-by Arrangement that we just signed. Under that Standby arrangement, we had particular fiscal targets that we wanted to meet in relation to the fiscal deficit and the debt level, and we’ve been making really good progress in relation to those things,” the deputy principal of the University of the West Indies, Cave Hill Campus, stated.
“So we want to ensure that we not only tackle the issue of prices, but we also want to make sure that we tackle the other challenges that we’re facing in Barbados at the same time, and sometimes it’s a balancing act. I think it’s a matter of looking at this in a very holistic way . . .,” he said, adding the Chamber was offering several solutions. ( SC)
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