Finance minister suggests 17.5 per cent rate will remain unchanged
Barbadians who were hoping for a Value Added Tax (VAT) ease in the upcoming Budget, are unlikely to see a change in the 17.5 per cent rate at this stage.
Minister of Finance Chris Sinckler has strongly hinted that the rate of VAT will remain unchanged for the time being, in light of the International Monetary Fund’s (IMF) suggestion that the overall rate of tax could come down if the Government eliminates a number of waivers and exemptions.
“I understand the reasons why people would want to telegraph what is coming in a Budget [but] if you look at the IMF proposals, you would see some are short-term, some are medium-term and long-term. If you look at some of the things about exemptions and zero rates . . . some of those things are structural in nature and will require further discussion and therefore are not of the nature to lend themselves to quick implementation in the way in which people would think it would happen,” Sinckler told Barbados TODAY in response to a direct question about the lowering of the rate of VAT below 17.5 per cent.
The Minister of Finance, who has been busy holding Budget meetings with sectoral leaders over the past week, was also asked specifically about the IMF’s recommendation of a new soft drink tax.
In response, he said Government was currently studying a number of recommendations, not just those of the IMF.
“Of course as you know, I established a committee that reported to Cabinet, headed by former Permanent Secretary in Finance William Layne and with other people on it.
“They critiqued the IMF document and made their own recommendations and also some additional ones based on their own knowledge of the system tax wise, and now we have the sector groups making their recommendation. So we are taking all together and making the most efficacious [decision],” Sinckler said.
However, he pointed out that “not all of those recommendations can be dealt with in a Budget”, stressing that quite a few were medium to longer term structural issues that would have to be implemented over a period of time.
The Minister of Finance, who is yet to release the actual date for the annual presentation, promised that it would be made before yearend.
He also reported on recent meetings with various stakeholders, including the Barbados Private Sector Association, the Barbados Association of Retired Persons, the Institute of Chartered Accountants, the Barbados Economic Society, the Small Business Association, the Barbados Manufacturers’ Association, the Barbados Agricultural Society and the Barbados International Business Association.
“We have met with a number of the groups already and they [the talks] have gone exceedingly well, I must say.
“Of course, a lot of the suggestions have been surrounding the IMF, the tax reform process. The groups have had copies of the IMF study and they have their own views and interaction has been great really. Everybody has been very cooperative and I am happy with what I have seen and heard coming out from the groups,” he told Barbados TODAY.
“My hope is that once we have done all of the groups and individuals that we can then bring them together for one final meeting later [this] week at which we can then have a collective discourse so that we can begin to [agree] what specific measures should appear in the Budget,” added Sinckler, who also met with members of the financial services sector today and is due to meet with representatives of the Barbados Chamber of Commerce and Industry on Friday.