Straughn raises concerns about investment climate
Government’s tumbling tax take from businesses points to an unfavourable investment climate, says economist Ryan Straughn.
“Corporate tax revenue is an indicator of the level of business confidence in a country . . . it gives a sense of how existing businesses are operating,” he said at the Barbados Labour Party-organised People’s Assembly last night.
“Once businesses are profitable, corporate tax revenues would be at a level sufficient to allow the Government to do most of what it wants to do, because profitable businesses hire people and make investment,” he added.
Straughn however quoted Central Bank figures, which show plummeting business revenue over the last six years.
“In 2006/7 the corporate tax revenue was $445 million . . . fast forward to 2013/14 to the fiscal year, ending March, the level of tax revenue from corporations, this is firms and small businesses, was $181.5 million,” he said.
“It doesn’t demonstrate an economy that is sufficiently healthy, because if the revenues from corporate taxation has declined so significantly, it means that something has gone pretty much fundamentally wrong in terms of . . . the trading environment in which businesses are operating,” he added.
Though conceding that a percentage of the decline in commerce was owed to the impact of the international financial crisis, he said, “to a large degree, the domestic policy has resulted in a situation where investment in the country has declined”.
“When businesses aren’t doing well, in order for you to attract new investment then you have to entice people to come,” said Straughn, adding that “the current situation allows the persons with the money to call the tune.”
However, he said as the economy rebounds Government would be less pressured to grant concessions to investors, “at least not as broad to the degree that we’re seeing at the moment”.