Sinckler defends major tax breaks

Minister of Finance Chris Sinckler is stoutly defending the millions of dollars in tax concessions given by Government, saying much has been gained by the island in terms of foreign investment.

“Many people often look at how much money is ceded in terms of revenue [but they don’t consider how much is gained] in terms of the level of economic investment, the level of economic spinoffs, jobs, activity and so on,” he told reporters this morning during the signing of a $30 million loan from CAF, the Development Bank of Latin America, adding that there was a need for “a middle-of-the-road approach to this matter.

“You don’t want to go giving away everything . . . the kitchen sink and everything you have in the country just to attract an investor, but you have to be smart enough to assess the market, see what is going on and look to see where tax concessions granted, or other concessions granted, can be effective in attracting that level of investment,” he stressed.

Against the backdrop of a suggestion yesterday by former Jamaican prime minister Bruce Golding that tax concessions were a “serious danger” to economies, Sinckler insisted that the revenues needed by Government would not have come without the financial inducements.

“Suppose the investor doesn’t invest, or goes somewhere else? You don’t get that activity and you still don’t get the revenue,” he argued, adding that Government would have the “misery” of hearing the same people who are criticizing the concessions saying ‘the economy is not growing and the unemployment is high’.

During yesterday’s discussion on Fiscal Policy and Political Cycles at the 2017 International Monetary Fund (IMF) High Level Caribbean Forum at the Pegasus Hotel in Kingston, Golding said Barbados and other Caribbean countries were losing millions of dollars every year due to the concessions being used to lure investors to their shores.

He said it was almost impossible to wean some businesses off those concessions while suggesting that tax incentives should not be to the detriment of the country’s economy, and the process should be transparent.

“We have some incentives that were put in place from the 1960s when the environment was different. We find that when we give, it is almost impossible to wean the beneficiaries off. So I think a government must have the flexibility to provide incentives where it is important for growth, but  . . . it must also be contained so that it doesn’t become a major source of revenue loss,” Golding said.

However, Sinckler singled out Royal Westmoreland and Sandals as two of the more controversial investments which have resulted in major economic spinoffs for the island.

In the case of Royal Westmoreland, he recalled that late Minister of Finance David Thompson had approved the deal which he said has resulted in thousands of jobs and an economic explosion on the west coast.

Sinckler also said that with the signing of the memorandum of understanding with Sandals, over $200 million has been invested in the old Casuarina Hotel on the south coast.

“[Sandals also] bought the land around it with the intention of extending it and are now finalizing the construction of another hotel, which is to the value of another $150 million to $200 million.

“I speak subject to correction, but it is a substantial investment, certainly more than $100 million,” the Minister of Finance said, adding that the Gordon Butch Stewart-led hotel chain was expected to start work on another hotel at the Almond Beach, St Peter site in January next year.

“So on the basis of seeing what was in Barbados, seeing what they had before in terms of the concessions offered, they put their monies where they mouths are,” Sinckler said, while pointing out that 1,000 workers were hired by Sandals during its construction phase, with 500 people finding permanent employment.

13 Responses to Sinckler defends major tax breaks

  1. Mechell Springer
    Mechell Springer November 17, 2017 at 10:44 pm

    To the economist out there what are the implications if any of the excessive granting of concessions?
    Are there any defined limits to granting concessions? what constraints are in place for the approval of a concession? Does a request for a concession go before a group or does one person single handedly decide to grant them. How does it work? Help us the public to understand

    Reply
  2. Tony Webster November 18, 2017 at 5:53 am

    A concession…is not a crime…or even a misdemeanour. It is a valid policy instrument. However, just as a knife can cut dis…and cut dat…even can cut it’s user too…it’s the extent..the mis-use…or perhaps…abuse…that creates the rub. You get your back rub…I get my back rub…tax-payers get their back-sides cut…sorry…rubbed…for 42 years. If 42 is “good”, wouldn’t 62 be “better”?

    How long would it take Butch- or anybody owning a business loaded wid such goodies..to sell it to me, you, or Ex-President Donald? Five minutes…even allowing for signing with three different pens for “historical flavour”.

    Reply
    • hcalndre November 18, 2017 at 9:13 pm

      Hello Tony; who are the beneficiaries in the deal?

      Reply
  3. Ralph W Talma November 18, 2017 at 8:35 am

    Well said Mr Webster. And where does the profits go? All of it out of the Island.

    Reply
  4. Harry November 18, 2017 at 8:37 am

    Concessions are generally speaking good tools for Govt to use, it is however how they are used that matters. In the case of Sandals who received massive concessions on just about everything still it is nigh impossible to get a bajan rum & coke there. Sandals brings in a large % of their requirements liquor linens etc. from their Miami based warehouse (duty free) instead of purchasing locally. And of course money generated by bookings again in their Miami office remain there with just that is needed to pay salaries wages etc sent in.

    Reply
  5. Sue Donym November 18, 2017 at 9:00 am

    How can any Barbadian taxpayer – individual or business – take Mr Sinckler seriously when his adminstration’s constant message is that we all must feel the pain for the future good of Barbados.

    How should struggling Bajan firms feel when they can’t get VAT refunds or have to wait many months for answers on simple waivers and allowances, while in our midst, is a healthy multinational concern, sitting pretty, counting off 25 years of concessions and tax-free status.

    This is no middle of the road approach, for there are miles of open road between desperation and a well balanced policy. The jobs are a necessary part of the transaction, which is an investment in Sandals. Even the most inexperienced predator quickly learns to spot the weak ones in the herd – it conserves energy and saves time. If it were an investment targeting the economy, there is larger and faster growth throughout the Caribbean. Apart from wages, how much of Sandals’ earnings stays in Bim – that’s the big money statistic.

    Reply
  6. Richard Johnston November 18, 2017 at 11:06 am

    One-off concessions invite favoritism and corruption.

    Reply
  7. hcalndre November 18, 2017 at 3:51 pm

    The minister said that the concessions was or is a great investment for the Barbados` economy. He also speaks of the millions that Sandals generate, where is it going? can someone please say or are they`re afraid.

    Reply
  8. hcalndre November 18, 2017 at 4:47 pm

    Seeing that happy face of the minister signing for that loan, I`m thinking what is on his mind that have him smiling so broadly.

    Reply
  9. Jennifer November 19, 2017 at 7:12 am

    Well said Sue. I like that word predator – cause we got a lot of them running around in this place and very few can spot them. Mind you predator and middle – of- the road approach do not go together either. When this lot talk about people feeling pain in this place, it is usually the bottom people and no one else. I would take the op too if I was them so called investors. This shi^ reminds me of the British benefits system back then, designed to set people on it without a means of weaning them off. Bare reverse plantation behavior from Sinkler in every way. By the time you get them weaned off them gone to another place to set up. Concessions for concessions. If you people revamp your education system then we will soon see inevitable change and really go some where and the investors will be begging to come in instead.

    Reply
    • Sue Donym November 20, 2017 at 6:29 am

      Thank you @Jennifer. Of course you’re right with the rest of your analysis. One other sector notably suckling was the offshore financial companies who packed up and fled to new green pastures when their very generous concessions periods had expired.

      Reply
  10. Thunder November 20, 2017 at 10:32 am

    Oh yes you can always find it in your heart to give tax breaks to persons ofrom overseas,but you cannot give tax breaks to local business men who are struggling every day to keep their doors open!
    Many of these businesses have money and don’t have to wait on government,the D.L.P government must love their own, home drums, must always beat first!

    Reply
  11. Buun November 20, 2017 at 10:57 am

    They do not care about us. The PM already said we got it too good and would like to see us all back in slavery.

    Reply

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