Banks say they already pay high taxes but on board with levy on assets
Commercial banks have hit back at critics who have not only accused them of increasing charges to offset the tax they have to pay on assets but insist they should be paying more tax.
The charges against the banks were made during debate last week in the Senate on the Tax on Assets Bill that will see credit unions and insurances companies joining commercial banks in paying 0.2 per cent tax on assets $40 million and over.
But president of the Barbados Bankers’ Association Glyne Harrison said some of the comments were seen as “protection” of credit unions.
On the heels of a Barbados TODAY report that Scotiabank was increasing some of its fees, Government Senator Irene Sandiford-Garner had argued that the bank was increasing fees in anticipation of having to pay the taxes; Independent Senator Alwyn Adams said the move by that financial institution underscored the need for commercial banks to pay more in taxes to Government; and Independent Senator Tony Marshall argued that credit unions should have been excluded from paying the tax, saying working class Barbadians would feel it the most.
However, Harrison insisted in an interview with Barbados TODAY the commercial banks already carried a heavy tax burden but, even so, they did not have a problem paying the tax on assets.
“We recognized these are [difficult] times for the country; it is a time when we have to get people to do what is expected of them to carry some of the burden to get us to a better place. So while it has hit all of us in our pockets and it has been a real cost to us, it is something that we recognized we have to [do to] play our part. So we are quite on board with it. Each bank has already put millions of dollars into the Government coffers by way of the tax and we are quite prepared to continue to comply right through to the end.”
He pointed out that while the legislation was formally introduced last week, commercial banks have been paying it since the last quarter of 2013.
Harrison also noted that that commercial banks pay a significant amount of taxes during the year, including a quarterly insurance levy on deposits held in the system.
“This is something that the credit unions and insurance companies don’t have to pay. So that is another way that we are also responsible in the financial sector,” he said.
“The statement was obviously made as a protection statement for credit unions and why they should not pay because the bigger banks have advantages. But the reality is that the banks carry the same customer base by and large as credit unions, and credit unions and banks tend to share a large percentage of the same customers.
“So the same argument that can be used for credit unions that it is the average Joe that deposits at credit unions, we have many average Joes that also deposit at banks. So the same tax on assets that the banks are being asked to carry without any concerns, those hit the same customers in the same way where we have to carry the tax and we don’t pass it through,” the association
Speaking specifically about Scotiabank customers having to pay a fee on primary savings accounts, from February 1, if their balances fall below $300, Harrison said it was the result of “a normal operational review” of how the bank charged for the services it provided.
“It is a fair and accurate charge that they have on their books at the time. The bank in particular has also provided alternative ways of reducing charges, by way of using electronic channels, by way of determining which of the various channels customers would want to use and be charged appropriately . . . So customers have the right of choice,” he said.
“Even from one bank to the other the charges are different, so customers have the right to determine bank A versus bank B. So there is no clandestine move by any bank or the industry to use charges as a way to recover any money lost from taxes on assets or any other type of levy against them,” insisted Harrison.
He also noted that while the Fair Trading Commission required commercial banks to give a 30-day notice of any changes, many of the banks went beyond that and gave “way more” than and the required minimum.