BLP statement on banks’ suspension of real estate transactions
THE FOLLOWING IS a statement from Leader of the Opposition Mia Mottley on the Barbados Revenue Authority Amendment Act.
Local commercial banks have suspended property-related transactions until there is clarity on the issue of Tax Clearance Certificates.
The Barbados Labour Party takes no comfort in the announcement by the Barbados Bankers Association about the lack of clarity regarding the recently introduced requirement for Tax Clearance Certificates with respect to all property transactions and all loans involving any form of property interests.
When this amendment was introduced by the Government two months ago, the BLP took the position that this action would be the death knell of business in Barbados. The amendment to the Barbados Revenue Authority (BRA) Act would cause total and complete chaos in the lives of citizens and businesses, conducting ordinarily routine transactions. The Barbados Revenue Authority simply does not have the institutional capacity to undertake the role of issuing this volume of Tax Clearance Certificates in acceptable timelines required for commercial transactions in Barbados.
The Barbados Bankers Association has confirmed that there are hundreds of transactions now being affected at a value of over BDS $211 million. This is just the frontline of the problem as other businesses and transactions are already being affected in their ordinary course of business, even though they are not the ones depending on loans but are dependent on parties being able to close other commercial transactions. These actions therefore stand to affect all households and businesses in Barbados.
This speaks nothing of the revenue the Government is depriving itself of not just in Property Transfer Tax and Stamp Duty but ultimately all revenue emanating from the conduct of legitimate commerce in Barbados.
Additionally, there are the obvious implications for the employment of persons working in the sectors that will be affected by this interruption in business – financial institutions, realtors, lawyers, contractors to name a few.
The BLP warned that there would have been an inevitable revision of the risk management procedures governing the review of loans and also the monitoring of existing loans from year to year. It is clear that the Banks and other financial institutions have now confirmed that these revisions are critical for them before they can continue to do any further business with loans.
We have been aware for over a month now of the legitimate concerns of the banking sector and the related professions. The failure of either the Prime Minister or the Minister of Finance to treat to these concerns with the absolute urgency that they demand has clearly resulted in this suspension by the Banks of the closing of all real estate related transactions and the disbursement of funds related to the same.
It is unacceptable that this matter is to await resolution with a meeting one week away – on no less a day than Budget Day and with BRA who have no power nor capacity to change policy.
It was for this reason that the BLP urged the Government to pause when it introduced these amendments to Parliament, and consult, even if before a Select Committee of Parliament so that we could appreciate the capacity of the BRA and equally the volume of mortgages and credit transactions involving property in any way being dealt with by the financial sector.
We call on the Government for the urgent repeal of this legislation and for us to determine how best we can reduce the arrears both owed to and by Government, given the protracted economic recession of the last 8 years.
The one thing that is required to bring back confidence to this economy and to allow people to invest and go about their business is certainty. This amendment has achieved the exact opposite – total gridlock just to do ordinary business. This is certainly NOT how we can turn our economy or the well-being of Barbadians, around for the better.
We appeal to the Prime Minister in the national interest, as the Bankers have already done in the last few weeks. This is not a time for politics or we told you so. It is simply a time for this Government to reverse the madness and repeal the amendments with despatch. This can be done on Tuesday before the start of the Budget asa simple Bill doing so will receive the Opposition’s support.