When the cart seems to be before the horse
From all appearances and reports, it was clearly a case of the Government’s left hand not fully knowing what its right hand was doing.
The unfortunate result was that persons caught in the middle and directly affected by the actions of the right hand, were left none the wiser as the left hand was unable to provide satisfactory answers to the queries they had.
Not surprisingly, the frustration caused tensions to rise and the discussion became heated at times. The reference, of course, is to last Friday’s meeting between the Barbados Revenue Authority and the private sector on the new National Social Responsibility Levy, which took effect on September 1.
The meeting was convened by the Barbados Investment and Development Corporation (BIDC) in a bid to provide clarification in response to the business community’s concerns, especially manufacturers, about some aspects of the implementation of the two per cent tax.
The measure was announced by Minister of Finance Chris Sinckler during his mid-August presentation of the Government’s 2016 Financial Statement and Budgetary Proposals. It seeks to raise an additional $142.1 million in revenue annually that will go, according to Mr Sinckler, towards helping to finance the delivery of public health care services.
“The levy will be applied at two per cent on the Customs value of all imports at the border with the exception of goods for the manufacturing, agriculture and tourism sectors as covered under existing primary legislation such as the Fiscal Incentives Act and the Tourism Development Act,” Sinckler explained during his recent Budget speech.
He added: “These are being excluded so as to avoid any double taxation since the two per cent tax must also be applied on domestic output to ensure fair treatment under WTO [World Trade Organization] and CSME [Caribbean Single Market and Economy] regulations. . . .
“The tax will be placed before waivers are given; hence, it is not automatic that there will be exclusions based on prior arrangements except for the sectors and interests identified above. Any waivers will be solely at the discretion of the Minister of Finance and Economic Affairs.”
Despite having responsibility for collecting the new tax, the BRA was unable, however, to provide much-needed clarification on certain pertinent issues related to how it will be applied. It seems as if the Ministry of Finance had not furnished them with all the information they needed to know to provide clear answers to the business community’s concerns.
To have witnessed what transpired must undoubtedly have been an embarrassment for Minister of Industry, International Business, Commerce and Small Business Development Donville Inniss. He was not originally scheduled to be at the meeting but just happened to drop by.
After witnessing the spectacle, he candidly acknowledged: “Listening to you here this morning and listening to other people around, there is quite a bit of confusion. The business community . . . cannot exist in an atmosphere of uncertainty and this two per cent levy obviously now has created a level of uncertainty.”
Underscoring the need for an urgent meeting between himself and his colleague, Mr Sinckler, to come up with “clear guidelines on the matter”, Mr Inniss added: “I think what is needed is that clarity to be brought to these matters not in a matter of weeks but hours. . .”
What we witnessed last Friday was another example of communication failure on the part of this Government which somehow seems unable to get its act together in the critical area of stakeholder communication. We feel as if we are flogging a dead horse on this issue, having raised it so many times, but will this Government ever appreciate that effective communication is key to success in every sphere of endeavour?
Otherwise, it will not win the support and cooperation of key stakeholders that are so crucial for achieving its objectives. It is simply unbelievable that a major revenue measure could be introduced without the officials responsible for its administration and the persons who will be directly affected not being fully aware of how the measure will work.
Was this a case of the cart being placed before the horse where a measure was rushed towards implementation without carefully thought being given by the author as to how it will work? We would hate to think so. Nevertheless, such actions on the part of Government only serve to undermine the confidence of the business sector.
It also contributes to reinforcing the perception of Barbados as not so friendly place to do business. Yet it is to business that Government looks to drive the emerging economic recovery as the private sector plays the pivotal role of engine of economic growth.
We hope the particular issues are speedily resolved and that Government, learning from the experience even at this eleventh hour, will start to take its communication more seriously. Is that too much to ask?