Prime minister says changes coming for VAT legislation
Prime Minister Freundel Stuart is blaming the complexity of the existing Value Added Tax (VAT) Act and cash flow challenges for the delays in paying out VAT and Income Tax refunds to businesses and individuals.
And while he could not say when the money would be paid to waiting taxpayers, he assured the matter was being “steadily handled”.
Addressing business leaders at the first monthly luncheon of the Barbados Chamber of Commerce and Industry at the Hilton Resort this afternoon, Stuart said the VAT Act had to be simplified and a comprehensive overhaul was in the works.
“The act has been much more complex than experience has shown it needed to be. We got a look taken at it by the Caribbean Technical Assistance Centre and the Cabinet has discussed this issue at length and it is our view that the application of the VAT Act has to be simplified,” he added.
Stuart said it was the part of the legislation dealing with zero-rating that was creating the most problems.
“Therefore, as part of a programme of fairly comprehensive tax reform, we are going to be looking at amendments to the VAT, to put it on a completely different footing, primarily items that are VATable and items which qualify for exemption,” he said.
He acknowledged, however, that the challenges facing Government in paying out VAT refunds were not only administrative and procedural but financial as well.
“The problems of VAT refunds don’t only have to do with the act itself; it has to do with Government’s cash flow. So too is the individual income tax . . . We have been going through some challenges in terms of cash flow as a result of the overall slow down,” he said.
“But I am aware that these things are being steadily handled.
“One thing you can be sure, if Government owes you money, they will pay it. Government does not default on its obligations and certainly the Government over which I preside and the Cabinet that I have are too sensitive to issues of good faith to allow defaults of that kind to become too chronic,” he promised.
The country’s leader also sought to assure the sector that the island’s economic fortunes would turnaround in the fiscal year 2015-2016, compared to the previous financial period.
“I think dawn is breaking for us now and the year 2015 promises to be a much better year than 2014,” Prime Minister Stuart said.