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‘Illegal’ levy

Retailers told to stop charging two per cent tax

Government’s newly-introduced two per cent National Social Responsibility Levy (NSRL) is proving to be a headache for more than just this island’s manufacturers.

Less than a month after manufacturers demanded an immediate review of the levy on the grounds that they were still too many ambiguities surrounding the tax, it now appears as though some local retailers are just as clueless about the tax and how it should be applied.

This prompted the Barbados Revenue Authority (BRA) to issue a strong word of warning today that the tax was not to be applied by retailers at points of sale.

In fact, BRA Commissioner Margaret Sivers sought to make it clear that “the National Social Responsibility Levy was not a sales tax” and therefore it was “illegal” for businesses to treat it as such.

However, while roundly condemning the practise, Sivers did not identify any of the offenders by name or give any indication as to how widespread the problem was.

She only confirmed that “the Authority has been receiving reports that some retailers have been adding a tax to customer purchases at the cash register and attributing the receipted charge as NSRL.

“This practise is inaccurate and quite frankly illegal,” the Revenue Commissioner said.

“Businesses should not show the levy on sales invoices or receipts and the levy therefore should not be paid by the consumer. It is to be treated no differently from import duty. The only line item which is shown on sales invoices and receipts is the Value Added Tax (VAT) information,” she stressed.

However, recognizing that the levy was still very new, she said Government was really seeking to “clarify” the matter at this point “so that retailers do not fraudulently tax their consumers”.

During his August 2016 Financial Statement and Budgetary Proposals, Minister of Finance Chris Sinckler had explained that the new tax was to be applied on the customs value of all imports, with the exception of goods for the manufacturing, agriculture and tourism sectors, in order to avoid double taxation.

However, the two per cent levy was met almost immediately with opposition, as some manufacturers openly complained that while they were exempted from paying the tax on imported raw materials, locally produced products would still attract the levy.

This, they argued, amounted to a disincentive for using local products in their production.

That point was forcefully made during a heated meeting at the headquarters of the Barbados Investment and Development Corporation on Harbour Road last month at which BRA officials were bombarded with questions.

During that meeting, the CEO of Robert’s Manufacturing, Jason Sombrana, had beseeched Government not adopt a heavy handed approach to entities not yet in full compliance with the tax, which took effect on September 1, while arguing that the ambiguities of the levy had left many on an unsure footing.

The CEO of River Bay Trading, Ian Pickup, had also made his concerns known about the levy. In fact, he had suggested that instead of introducing the contentious measure, Government should have considered raising the VAT, which is currently applied on goods and services at a rate of 17.5 per cent, to 19.5 per cent.

However, since that meeting there have been no further concerns expressed publicly by the manufacturers, even though the tax, which is expected to rake in about $142.1 million annually for Government, and go towards assisting in the “offsetting” of the cost associated with financing public health care, is still widely unwelcomed.

When contacted today, the President of the Barbados Chamber of Commerce and Industry (BCCI) Eddy Abed told Barbados TODAY that he had not received any reports of retailers adding the two per cent at points of sale.

However, he expressed surprise that retailers were still unclear about the levy, pointing out that several meetings were held and numerous pieces of correspondence sent out “explaining, clarifying, showing examples and going through step-by-step as to how the NSRL is to be applied and how it is to be calculated”.

“I would be extremely surprised that at this stage people are still ambiguous as to how it is being done,” said Abed.

However, he said: “I don’t think anybody is trying to profiteer from it, I think it is a straight case of just being unaware or unsure and figuring that, ‘if I am going to falter, let me falter on the side of being over-conservative’.

“I can’t see anybody trying to profiteer from it. The law is extremely explicit. The vast majority are importers in this country and it is paid at points of entry. The few manufacturers that exist are charging it when they sell it to their customers and VAT is not to be calculated on it. It is only on the cost of the item. This has gone out several times,” Abed stressed.

marlonmadden@barbadostoday.bb.

6 Responses to ‘Illegal’ levy

  1. harry turnover October 22, 2016 at 7:55 am

    HEAR ABED….
    ‘However, he said: “I don’t think ANYBODY is trying to profiteer from it,’
    THE FEW MANUFACTURES that exist are CHARGING IT when they sell it to their customers and VAT is not to be calculated on it. ‘

    Reply
  2. Phil October 22, 2016 at 8:19 am

    AMAZING1 How is manufacturing supposed to continue to be one of our major ingredient as is indicated on our Coat of Arms? – PRIDE and INDUSTRY ??? Government drops a tax on them and e tells them they cannot pass it on. How will the wheels of industry turn? What is the BMA saying? are they Gagged and chained? Here is a suggestion that will stimulate the economy. Starting with our 50th anniversary, and every November after that, Give every Barbadian an Independence (birthday if you like) gift. Waive all PAYE contributions. This will stimulate more retail activity for the Christmas season. This will merge into the Tourist season. More money will be in circulation, more business activity, More shopping, more spending, more VAT. collected. Here’s your 2.5 % worth BRA. This is a solution not a complaint.

    Reply
  3. Phil October 22, 2016 at 8:37 am

    Eddy Abed, Here’s how your organization can reel in more foreign exchange cash if you like, Your members can offer a further 10% discount on all purchases paid for in US Dollars cash only. A few things will result here and they will be in a win win situation. More spending, more foreign exchange for the country, No one can stop or will try to stop you. This can bring in 20% to over 40% in sales. Nuff US Dollars are floating around.

    Reply
  4. Smiley October 22, 2016 at 11:08 am

    DROP THE UNGODLY TAX !!! PEOPLE SUFFERING AND THE DLP MINISTER’S BANK ACCOUNTS FLOURISHING.

    Reply
  5. Aneta October 22, 2016 at 12:19 pm

    Amen to that smiley. The proof of there for all to see. When them rascals leave office dem will be stinking rich and we poorer

    Reply
  6. Ian Pickup October 24, 2016 at 9:09 am

    The few comments here suggest that the application of the levy is still not clear in people’s minds. Manufacturers do add the levy to their invoices, in other words, it can be passed-on by manufacturers, though VAT is not applied to it. Eddie Abed, bless his little (imported) cotton socks, can’t resist the dig at “the few manufacturers that exist”, because the BCCI tries to use that as a reason for government to reduce duties. But “BCCI” stands for “Barbados Chamber of Commerce and INDUSTRY”. So what is Eddie doing about boosting the prospects of his manufacturing members?

    Reply

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