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    July 23

  • 09:12 PM

PURELY POLITICAL: Will Sinckler follow David's course?


Added 21 November 2010


WILL NEW MINISTER OF FINANCE Chris Sinckler's maiden Budget be a continuation of the thrust of the late Prime Minister and Minister of Finance David Thompson, or will he seek to chart a brand new course? That’s the question that has been on the lips of some Barbadians since Sinckler’s appointment last month, and a prior indication from new Prime Minister Freundel Stuart, that the much delayed Financial Statement and Budgetary Proposals 2010-2011 would be presented this year after all. Following a series of pre-Budget meetings with the private sector and the Congress of Trades Unions and Staff Associations (CTUSAB) over the past few weeks, Sinckler should be ready for tomorrow’s presentation in the House of Assembly starting at 4 pm. In Thompson’s last Budget – May 18, 2009 – he had said he would seek to keep the economy stable partly through a focus on limiting the decline in foreign exchange earnings, achieving greater efficiency and eliminating waste in the public sector, keeping enterprises going, and on providing strong flexible safety nets. “Our challenge,” Thompson said then, “is to narrow the fiscal gap by ensuring that Government spending does not grow faster than the rest of the economy or by increasing Government revenue faster than growth in the economy or by both measures at different periods of time. “While we press for growth whenever we can, we will seek earnestly and as a priorrity in this financial statement to help existing enterprises keep their doors open. Business enterprises are the ones with the responsibility and capacity to exploit the growth opportunities that may initially be generated by  Government's efforts.” The private sector, for its part, has submitted to Government a wish list with a focus on maintaining/increasing employment and lowering the cost of living. Its recommendations cover a range of issues, from adjustments to income tax provisions and the VAT, to improving the business climate and trading platforms, clarity in the financial sector, revamping the Special Development Areas Act to expand the designated areas, energy, allowing the Customs and Central Revenue Authority to function separately, concessions to property owners to help in revitalising Bridgetown, and protecting the long-term health of the nation. PBSA’s say The Barbados Private Sector Association (BPSA), in its submission to the new Minister of Finance suggested that in order to protect and secure the gains made by taxpayers through increases in the personal allowance and a reduction in rates between 2003-2007, the individual allowance should be indexed in accordance with wage increases. “We note that in 2007, the Government proposed that the personal allowance will be adjusted every three years in accordance with the average wage increases over the preceding three-year period,” BPSA said. “We endorse this proposal and recommend that this policy be adopted in this income year since this will assist both the public and private sector with wage negotiations due to take place this year.” Apart from a call to extend the VAT rate of 71/2 per cent to licensed ancillary tourism businesses such as attraction, tours and some restaurants, BPSA suggested the deletion from the Act of the section relating to settlement of insurance claims. “Additionally, the BPSA believes that the threshold level at which a person making taxable supplies has to reach before applying to be registered under the provisions of the VAT Act is too low.” It is now $60 000 or $5 000 per month, set when VAT was introduced in January 1997. BPSA said a review of VAT regimes across the region revealed that Barbados has one of the lowest thresholds. “We recommend that consideration be given to increasing the registration threshold to not less than $100 000 annually as this would reduce the headache of many small businesses and also reduce the administration costs to the VAT office that by observation is lacking in the human resources to manage the existing workload.” BPSA noted that several issues have arisen over the years with the interpretation of various provisions of the Income Tax and Value Added Acts and regulations, creating a level of uncertainty with decisions having to be resolved at the appeals level. It also called on Government to implement a well funded amnesty programme to conduct an adequate advertising campaign and the provision of personnel to assist people with their outstanding taxes, penalties and interest. “We recommend that Government introduce a voluntary disclosure programme which is also embedded in legislation that would not severely penalise persons who voluntarily come forward and admit to genuine errors,” BPSA said. “Such a programme would help instill a spirit of cooperation between taxpayer and the Government.” It also suggested the review and/or removal of “irritating taxes” such as the Property Transfer Tax and Stamp Duty on the transfer of shares or real estate, and others such as  the tax on cigarettes on inbound tourists which provide little or no revenue to Government. On energy, BPSA noted the 2008 amendment to the Income Tax Act to provide for individuals to claim a deduction of up to $5 000 for buying environmentally friendly products. It pointed out, however, that the deduction has several limitations, including being restricted to those who owned the house in which they lived and that the list of qualifying products has never been made public. “The list of environmentally preferred products should either be embodied in the Income Tax Act or in the regulations and should be extended from what it currently is,” BPSA said. “In addition, the deduction should also be available to tenants who may have to fund their own method of saving energy.” BPSA also recommended:  An individual should be allowed to claim part of the purchase of an alternative fuel vehicle or hybrid vehicle as part of their income tax allowance/deduction (up to $10 000);  excise tax on natural gas vehicles should be waived and road tax charged on these vehicles and alternative fuel vehicles, including hybrids, should be set at no greater than 20 per cent of what the rates are currently;  duty should be removed from natural gas compressors used exclusively for refuelling NG and NG conversion kits; and  import duties on household compost units should be reduced. BPSA also felt Government should grant further concessions to innovative type firms, especially environmentally friendly technologies such as solar power, and suggested that they be used to further encourage solar energy, rather than electric heaters, in hotels. The association said the Special Development Areas Act should be revamped and its administration enhanced. It added that Government should consider: • expansion of the designated areas and indicate clearly the expanded defined area; • other parishes or towns, such as Holetown and Speightstown, should be identified where opportunities for development are being promoted; • unambiguous definitions of types of exemptions that would avoid the loss of confidence of investors resulting from constant bureaucratic battles with the Customs Department applying subjective and inconsistent criteria to exemptions; • removal of bureaucratic impediments arising from ‘personal type interpretations’ which are not consistently applied such as what constitutes “renovations” or “refurbishments” and as a consequence, projects are impeded even halted for months; • time limits to indicate the maximum time questions should take to be resolved; • establish a standard timeframe for decisions on applications for ‘approved developer’ status; • devise a protocol outlining the timeframes for the various approval stages; and  provide a waiver/refund of franchise fees for businesses established developments approved for SDAA concessions to promote the attraction of international brands. BPSA also called for synchronisation of the printed Customs tariff and that in the ASYCUDA system and an increase in resources to meet the demands of the public. • Albert Brandford is an independent, freelance political correspondent.


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