Timing of tax on gas ‘not good’
The 20 cent cess on gasoline could prove to be problematic in the short term, and given its timing, it could be bad for businesses as well as households when it comes to planning.
This is the assessment of two of the island’s noted economists who spoke to Barbados TODAY on the tax, which became effective today.
President of the Barbados Economic Society (BES) Jeremy Stephen said the timing of the tax on gasoline and the extension of the tax on bank assets to include the credit union could be “problematic”.
“What we think needed closer examination was the fact that the distribution sector of this country, is just after tourism in terms of size. And that sector probably more than any other, that should surely impact on that sector which will feed into retail cost quite soon. So the timing of it is a bit unfortunate. However, it could be circumvented as suggested during the green economy consultation,” said Stephen.
“Until Government makes a clear announcement as to what the neutralizing subvention or savings will be that will help the economy going forward the 20 cent cess on diesel could prove to be problematic in the short term, driving down consumption even further and possibly helping retract the economy. I don’t know to what degree but there should be some measure of a retraction in the economy just based on how significant fuel costs are in the distribution sector,” he added.
As for Government’s retrenchment exercise, Stephen said the BES maintained that the timing of the exercise was not the best but encouraged those workers who were laid off to seek out any opportunities.
Ryan Straughn, another economist, said he was concerned that businesses and householders would not be in a position to better plan for the short to medium term, given a lack of timely information from Government regarding the 20 cent tax on diesel.
“As it relates to the gas, that will impact everybody, businesses and households alike, and again it still speaks to the household being able to plan. So whether the retrenchment has ended or not . . . I certainly didn’t think the numbers that were being referenced were going to make much difference to the current expenditure. As I say from a planning perspective it is really not a good thing especially when it comes to businesses,” he said.
“It speaks to the ability of businesses to plan and in particular the financial institutions. It is something that is quite worrisome to the extent that you are not being provided the information as required . . . .To introduce new taxes like that does not bode well for confidence in the economy,” said Straughn.
In addition, Straughn agreed that extending the tax on the assets of financial institutions to include credit unions had taken the industry by surprise. He described it as a situation that was not well implemented, adding that clarity was still lacking.