Small businesses outline Budget expectations
With the 2016 Financial Statement and Budgetary Proposal less than a week away, major private sector groups are hoping that Minister of Finance Chris Sinckler will spend time outlining Government’s plans for tackling issues relating to business facilitation during his presentation.
In addition, Chief Executive Officer of the Small Business Association (SBA) Lynette Holder said members of her organization had put forward a range of issues they wanted addressed.
SBA members said they were expecting a credit guarantee fund to be established, which would allow financial institutions to give small businesses loans without collateral; provision of incentives to hybrid and electric vehicles manufacturers so small business owners could access those vehicles at a cheaper cost; and increased duties on imported goods that can be sourced locally.
In addition, they said they were hoping for reduced interest rates for loans; a reduction in the Value Added Tax (VAT) threshold and for Government to honour proposed measures from previous years, including a set percentage of Government procurement for the sector as well as subventions.
Holder told Barbados TODAY the guarantee funds currently in place were not working for SBA members since it was still difficult to access the funding.
She added that it was time Government moved with haste to implement the proposed policy development framework for the sector, which would address a range of issues, including those relating to information communication technology, training and fiscal incentives.
“The sector is suffering. It is a fact, and it has been for a while. Some will argue that the external economic crisis had impacted us and I agree, but our domestic policies have also compounded the problem,” Holder said.
“These are things we want the minister to address in the budget because the policy framework has some fiscal provisions that we would want to see brought to the sector. The income tax rebates and things like that for development and training,” she added.
In the association’s August newsletter, Holder also pointed out that small and medium-sized enterprise operators continued to face financial challenges “stemming from our VAT system”.
However, the small business executive pointed out that while Government had noticeable difficulties in paying VAT refunds, the introduction of the Central Bank’s Liquidity Facility in 2015 had helped to some extent, with approximately $82 million in refunds paid to date.
“With the upcoming presentation of the 2016 Financial Statement and Budgetary Proposal by our Minister of Finance and Economic Affairs, it is my expectation that fiscal prudence will prevail and every effort made to incentivize those at the bottom
whose contribution is not only to economic growth but social enfranchisement as well,” she said.
Meantime, Executive Director of the Barbados International Business Association (BIBA) Henderson Holmes said if Government placed more attention on ensuring various departments and agencies were more efficient that would help ease the island’s economic challenges.
“I do not know that is going to be addressed in a budget but those are things that are going to affect a lot of what the Government talks about in the Budget. These are the things affect Government’s revenues. Fixing those things will bring a beneficial effect to Government revenues, to the foreign reserves, because if we can create a better environment that encourages new business start-ups and existing businesses to expand operations, an environment in which people are comfortable doing business, a lot of our fiscal and foreign reserves problems will be solved,” Holmes explained.
“In the economy everything revolves around business activity. It is a level of business activity in the country that determines Government’s revenues and the foreign exchange and all that. So you fix those things that are adversely affecting the business sector,” he added, pointing out that the international business and financial services sector was not looking for any incentives.
“That is not what we are looking for. The biggest incentive to doing business in a country is the ease of doing business, the facility with which you can do business. That is the biggest incentive . . . The ease of doing business is a major factor in determining people’s willingness to establish and willingness to expand,” he explained.
Chairman of the Barbados Private sector Association Charles Herbert shared a similar view.
Herbert told Barbados TODAY while Government would have to take a number of “significant measures” to tackle the deficit, raise revenue and shore up the foreign exchange reserves, attention must be paid to improving efficiency across Government operations.
He said while the private sector was not necessarily looking for more incentives, by addressing the inefficiencies in the system economic growth would follow.
“We absolutely believe that it is one of the highest priority. We have some economic priorities that are perhaps a little more urgent, but for the long-term prosperity it can’t happen without us improving our ease of doing business,” said Herbert.