NSRL stunting growth, warns former Governor

Get rid of the dreaded National Social Responsibility Levy (NSRL)!

This is the latest piece of free advice being given to the Freundel Stuart administration by former Governor Dr DeLisle Worrell.

In his latest monthly newsletter issued today, Worrell warned that the tax and other “emergency”  measures announced by Minister of Finance Chris Sinckler in his May 30, 2017 Budget were actually “strangling” the life out of local businesses, and had stunted this island’s overall growth, while contributing to the free fall of its foreign reserves.

“The accelerating loss of foreign reserves in 2017 is evidence of the failure of Government’s adjustment policies. Reserves, which fell [by] $246 million in 2016, declined by $274 million in 2017,” said Worrell, adding that “since December 2012 the Central Bank has lost over $1 billion of foreign exchange”.

As part of a $542 million austerity package that was meant to close the island’s fiscal deficit, Sinckler had increased the NSRL from two to ten per cent on all locally produced items for local consumption, as well as the import value on imported products.

This was coupled with the introduction of a two per cent levy on all foreign exchange transactions, as well as an increase in the tax of fuel.

However, Worrell pointed out that while the NSRL was expected yield $218 million in tax receipts, between April and December last year, it actually realized $97 million in revenue.

“The NSRL has had an adverse effect on economic growth. In the absence of the tax, the Barbados economy might have achieved another 0.5 per cent on top of the one per cent growth rate actually attained. That represents a loss of about $50 million of national income,” the economist said.

The former Governor, who was fired in February 2017 amid public disagreement with Sinckler over economic policy, acknowledged, however, that the dip in foreign reserves was also as a result of Government’s foreign debt obligation, which he said required payment of about $137 million.

“Foreign lenders were unwilling to roll over this debt because of Government’s poor credit rating,” Worrell said while pointing out that although Government had forecasted a reduction of $82 million in expenditure during the May 2017 Budget presentation, its spending had actually increased by $57 million between April and December.

“The Central Bank’s foreign reserves continue to be in free fall, with the failure of Government’s corrective strategy. The current costs of Government operations exceeded revenues by $288 million between April and December last year, and Central Bank’s lending to the public sector increased by $372 million during the year. Unless this gap is closed foreign reserves will be exhausted, and Government will lose control of the exchange rate,” he warned, adding that “the Barbados Sustainable Recovery Plan 2018 does not address this issue”.

However, the former Governor assured that “all is not yet lost”.

He called for the removal of “the emergency taxes” as the first order of business, which he said was currently “strangling private business”.

Worrell also reiterated his call of the public sector to be reduced by at least 4,500 workers in order to cut Government spending and drive down the deficit, which fell slightly by $197 million or to just over four per cent during the first nine months of the current financial year.

The economist insisted that his plan, which also included an International Monetary Fund programme backed by financial support, be activated in order to help save the ailing economy and maintain the BDS$2 to US$1 peg.

“Barbadians must insist that our Government preserve our country’s reputation for taking tough short-term measures in the interest of future prosperity,” Worrell said.

14 Responses to NSRL stunting growth, warns former Governor

  1. luther thorne March 3, 2018 at 1:30 am

    Man yuh should duh say so when yuh did Guvnor
    Anyhow redeem yuhself by appearing on a platform and tawking .

    • David A. Wall March 4, 2018 at 9:43 am

      I personally believe that since the NSRL is a Tax that cannot be avoided at out points of entry and of goods, that is can work. What I would do as MOF, is to review the V.AT, and reduce it to a level that will compensate the revenue that Government needs to provide the much needed services that are made available to Barbadians. With the NSRL, no need to collect and refund to businesses, and the NSRL is unavoidable. Some do not even pay the V.A.T, and then Government cannot afford to pay the V.A.T refunds. I would however consider removing the NSRL from locally produced goods, especially if they are manufactured for the international market. Food for thought

  2. Ralph W Talma March 3, 2018 at 3:47 am

    I did not realise the situation was so dire. Does the Government not realise that over taxation is bad not only for workers but also for the Treasury. Folks according to the above, we have very little in reserve and International lenders seem loath to do business with us, and yet the Government is hiring more public servants? We must put a stop to this madness.

  3. harry turnover March 3, 2018 at 6:51 am

    Three more months of this madness and the PM talking overseas says that the reason why people criticize the MOF is not because of his economic policies which by the way HAVE BEEN FAILING since THERE IS AMPLE PROOF..LEFT,RIGHT and RH CENTRE since David Thompson dead…but because he went to the Garrison Secondary School and not Harrison College or Combermere.
    Can you imagine someone and a PRIME MINISTER at that standing up and telling GROWN UPS something like that when there is enough evidence IN BARBADOS and OUTSIDE of BARBADOS to show that the MOF policies..home grown or outside grown HAVE NOT BEEN WORKING since Sinckler was APPOINTED and REAPPOINTED MOF by the PRIME MINISTER himself ?

  4. Carson C. Cadogan March 3, 2018 at 9:09 am

    This is nothing more than spite from him.

    • MARIA Holder March 3, 2018 at 3:42 pm

      Hypocrite! You know he is correct

  5. milli watt March 3, 2018 at 9:30 am

    boss man why you don’t leave this crowd to their own vices……..free fall ain’t so bad when you hit terminal velocity you might be dead before hitting the ground problem solved.

  6. Jennifer March 3, 2018 at 10:01 am

    All this information is doing is preparing this people for global economic collapse.

    • Jennifer March 3, 2018 at 10:15 am

      Get rid of VAT, U headless horsemen ain’t collecting it anyway. The NRSL was never meant to promote growth, only financial usury from all sides, and it encourages every seller to take the pi$$..

  7. Falernum March 3, 2018 at 10:20 am

    Clearly the Laffer curve principle explains the fall off in revenue collection with the NSRL . . . the higher the taxation, the greater the incentive to avoid paying it. It causes recession and also drives consumer spending into the informal sectors.

    Progressive selective taxation. Look it up and get used to the phrase, Barbados. It’s the only way out.

  8. Jennifer March 3, 2018 at 12:01 pm

    Progressive selective taxation – good idea, but that will hamper the agenda.

  9. archy perch March 3, 2018 at 1:34 pm

    There is one Central Bank Governor.
    This other guy ( like former Senator Trotman) won’t fade away like a bad smell.
    Let the new people do their jobs will you.

    • MARIA Holder March 3, 2018 at 3:45 pm

      When he was Governor and Chris’ friend you thought he was the greatest thing since sweet bread. Have you no shame, chameleon!

  10. Jennifer March 3, 2018 at 3:56 pm

    NSRL stunting growth – depends………………


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