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Tax effect

Private sector leader concerned about the impact of municipal tax on employment

With about three months to go before the crucial tourist winter season starts, there’s a warning of possible job cuts.  

Chairman of the Private Sector Association of Barbados, Alex McDonald is cautioning that if industry leaders are forced to pay the controversial Municipal Solid Waste Tax on the site value of properties which generate waste, it could result in employment losses.

McDonald told Barbados TODAY that with some hotels already having to pay well over $200,000 in new taxes, to be further burden by the Municipal levy, could put workers’ jobs in jeopardy.

“The other important thing is, if you are compelled to pay a tax that you find you have to make a choice between paying a tax and keeping a job, that the Bajan sense of fair play would say, ‘I prefer not to owe Government anything’ and a job may have to go,” the private sector association head suggested.

“That”, he added,”would be an unfortunate impact that we also see people having to make some mental judgements about what they are going to do.”

McDonald said one of the major concerns was the burden that the productive sectors, particularly in tourism will face with the new tax.

“We know that we have looked at tourism as a foreign exchange earner and an industry that should be treated as an export industry also; never mind that the product is consumed here, it certain does generate its foreign exchange and so. We see that as a special case,” pointed out the business leader.

“One of the truisms is that a hotel tends, especially in our island, to be on the most expensive real estate, either through their own creation; they create a zone that attracts a higher rate of tax, and in that, what happens then, is that if the Municipal tax is based on the value of your land, then obviously it’s an inherent fact of truism that the people in our most productive foreign exchange earner, will also attract higher rates of taxation even for the very low square footage.”

The municipal tax will see to property owners who have structures with an improved value on their land paying  the levy tax at a rate of 0.3 per cent of the site value. The deadline for the first payment is July 28. The second payment is due in December.

McDonald argued that hotels which were now paying hundreds of thousands of dollars more in new taxes, should instead be using that money to build out their physical plant in order to meet the upcoming winter season, which officially starts in November.

“A further incumberance of a couple hundred thousand dollars is not, I think, where we should be focusing ourselves. That’s one of the issues that we see. Obviously, the knock on effects is that any increase in cost to, also increase in consumer based costs, consumers will ultimately pay more,” McDonald noted.

He also expects that Government may be forced to review the tax since some people may not being able to pay and it could fall short of the revenue target of $30 million a year.


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