Nothing but a tax grab, says Cobham banker

Government’s plan to impose a two per cent fee on all foreign exchange transaction is being described as nothing but a “tax grab” by one of this island’s most noted operators in the financial services sector.

What is more, director and local franchise agent for Western Union Horace Cobham told Barbados TODAY the tax measures announced in Tuesday’s Budget would force some companies out of business and throw some private sector employees out of work.

“My sense of the two per cent is that it is a tax grab. It has been presented as a sort of dampening impact in terms of the economy, but the question is, isn’t it simply just another tax under another name?” Cobham said.

Stating that foreign exchange was not exported without approval from the Central Bank, Cobham said if the measure were designed to dampen the thirst for foreign exchange it was simply just an extension of the National Social Responsibility Levy (NSRL), which was designed for the same purpose.

“If this is going to have a dampening effect it means that this is just simply part of the whole tax cause associated with the implementation. So from my perspective, the only purpose of this two per cent is to increase taxes. Rather than having the NSRL being 15 per cent, they have decided to make that ten per cent and apply two per cent under another heading, but the reality is that it is to increase taxes. That is my sense of the two per cent.”

The former head of the Barbados Bankers Association said missing from the discussion was the impact of the taxes on jobs.

He said there was no doubt that with such a level of taxation there was sure to be impact on economic activity, which would definitely result in some job losses.

“My fear is that the most vulnerable will be the ones that will potentially be hit first in terms of job losses because if you think of the process it is not a linear one
. . . and one of the things that will certainly happen is that by virtue of the overall cost of doing business and the reduced demand, businesses will have to think in terms of how do they survive, and businesses will do something that regretfully Government is not yet prepared to do, and that is cut costs,” Cobham told Barbados TODAY.

“So when businesses start to look at how costs can be cut, wages and salaries will be one of those areas, and you are talking about a reduction of numbers of people employed. So there needs to be an overt conversation on the impact of this Budget on employment in Barbados and I could see where in the private sector some businesses will perhaps fail, some businesses will have to reduce costs, overheads [and] people simply to stay in business and that is going to be a real factor going forward,” he stressed.

The financial services expert also warned that the two per cent tax would likely result in higher charges for Western Union customers due to increased operational costs, which are likely to be passed on.

“The prices are set globally but my expectation is that the cost of foreign exchange in our business will be passed on as expected, and therefore it will make the cost of doing the normal transaction more expensive, as will happen in the commercial bank. So the impact for us will be the same as the commercial bank because we regulate under the same regulatory environment as the commercial bank,” Cobham explained.

Meantime, Cobham welcomed the proposed audit of the foreign exchange dealers to better understand how that side of the industry works, although he was unsure what process the audit would take.

5 Responses to Nothing but a tax grab, says Cobham banker

  1. smiley June 1, 2017 at 11:00 am

    Taxpayers are soon to give blood if this government stays in power.Tax the poor and let the rich get richer. Looking out only for the Marks and those rock hard material.Free big house with swimming pool will only bring Chrissy pride for a while ,but what’s the sad state of affairs you got Barbados in .Deliver us Lord from evil.

    Reply
  2. Sisleen Greene June 1, 2017 at 5:23 pm

    That large gift now has the M.O.F head so swell that he has forgotten his origin. May God help all of them

    Reply
  3. Mark My Word June 4, 2017 at 7:20 pm

    The Civil servants have not got a raise of pay in ten years and they deserves one, how does Government get money to pay TAXES
    We want free health Care how is paid for TAXES
    We want free UWI education more TAXES
    We want everything FREE and pay no TAXES
    BLP/DLP government never had a money tree
    They all have to grab taxes as no one including Cobham will pay taxes voluntary
    Western Union don’t transfer money free you have to pay a fee which is a tax by another name, whats the point again .

    Reply
  4. Ras June 4, 2017 at 7:32 pm

    Taxes was from biblical times remember Zacchaeus
    All over the world the masses are been TAXED and will always be taxed. Taxes run the Country whether B or D in power
    Remember when Tom Adams remove the 5% sales tax and won the Government in 1976 and then double the stamp duty.
    Now the sales tax is called Vat, and it is now 17.5% in 2017.

    Reply
  5. Bobo June 6, 2017 at 7:19 am

    Taxes when applied to benefit the citizens that is law– Corrupt politicians gains-“”at present forced taxes” applied is a destruction to humanity—- who is paying for F Stuart latest Mercedes– a henious crime .

    Reply

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