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Caribbean News Today

BARBADOS | Prime Minister Stuart defends controversial National Social Responsibility Levy

Featured Prime Minister Freundel Stuart has defended the National Social Responsibility Levy Prime Minister Freundel Stuart has defended the National Social Responsibility Levy
BRIDGETOWN, Barbados, Aug 11, CMC – Prime Minister Freundel Stuart has defended the National Social Responsibility Levy (NSRL) saying the country was dealing “incrementally” with a ‘serious deficit problem.”

Addressing stakeholders to the Barbados Social Partnership meeting here, Stuart defended the near 400 per cent increase in the NSRL amid calls from the trade unions and the private sector for either a reduction or a complete repeal of the fiscal measure that came into force at the start of July.

During the budget presentation in May, Finance Minister Chris Sinckler said the NSRL, which was introduced in September last year, would be increased from two to 10 per cent effective July 1.

According to Sinckler, this increase will result in “increased revenue of $291 million for a full financial year and $218 million for the remaining nine months of the current fiscal year”.

The NSRL was imposed on goods imported into Barbados and on domestically manufactured goods. The NSRL was designed to finance the burgeoning cost of health care on the island and to assist with maintaining a clean environment.

Stuart told the meeting that the NSRL was conceptualised following widespread discussions both within and outside of the government and “that there are very ordinary people in the society who make suggestions to us from time to time.

“That’s is how policy is distilled and how we are able to formulate particular measures and that is where the National Social Responsibility Levy had its genesis. The diagnosis was done, we had a serious deficit problem which we were trying to deal with incrementally.

“But as we were dealing with it incrementally howls of protests were coming from many quarters as to how much money the Central Bank was printing for Barbados government and so on,” he said.

Stuart said that “that bull had to be held by its horns and nobody knows, I don’t get into the business of fortune telling, economic forecasting is a very slippery business” adding “we hope that the policy works…

“That is what every minister of finance has to do, every government has to do. It is what every business manager has to do, it is what every manager in every context has to do. Put policy in place, out all the necessary pillars of support around that policy and work towards its success”.

But Stuart told the meeting “it is never a guarantee that what we want you will get. So the National Social Responsibility Levy resulted from extensive discussion, conceptualisation, looking at pros and cons and trying our best to determine the best way forward.

“It was not done by stealth, it was done by discussion and the policy was eventually brought before the Cabinet of Barbados and a power point presentation done showing where it could lead and what were the possible implications and so on.”

Stuart said he recalled that meeting because ‘we were told there were no easy choices. It was either going to be something like that on the revenue side or on the expenditure side there would be consequences.

“But one thing we were made certain about was that we could not leave the problem unattended,” he added.

toni moore465
General secretary of the Barbados Workers’ Union (BWU), Toni Moore, says “the challenges confronting the economy is made worse by a combination of inadequate foresight and failed communication.

Earlier, the general secretary of the Barbados Workers’ Union (BWU), Toni Moore, told the meeting that “the challenges confronting the economy was made worse by a combination of inadequate foresight, failed communication and the lack of definite action that gave account to the involvement of the social partners to avert the quandary which we regarded was confronting our country”.

She expressed reservations about the discussions that were being held in a “peculiar format”, but said the union accepted in hope that it would help to resolve some the island’s pressing problems.

“At least the arrangement could be the start of an exercise, even though belated, to open transparent debate not only within the Social Partnership but all members of society on the issues that confront and affect us all”.

General Secretary of the National Union of Public Workers (NUPW), Roslyn Smith, said that the NSRL was ill-timed, making a case for a full roll back or a reduction.

“The levy was a move too swift, from two per cent to 10 per cent. We have been asking either for a repeal of the levy or to have it reduced to five per cent,’ Smith said, challenging the government to come clean on how it was spending the revenue earned from the NSRL.

She said government had initially announced that earnings from the tax would amount to BDS$40 million, but it actually earned BDS$60 million. She also raised concern that the NSRL revenue which was to be allocated to the Queen Elizabeth Hospital and the Sanitation Service Authority was not realized.

“We want to find out exactly how that money was spent,” Smith said.

NUPW president Akanni McDowall said workers should be given a coping subsidy to cushion the impact of the NSRL, widely expected to cause a significant rise in the cost of living.

Moore, however, urged caution on the coping subsidy as she instead pressed for a reduction in the NSRL.

“This meeting may actually be able to realize the benefit in reducing the NSRL; that is our hope…and if we can address that, we may not have to look at a coping mechanism.”

President of the Small Business Association (SBA), Dean Straker, pleaded with the government to seriously look at the NSRL, which he warned would devastate local manufacturers.

“In the case of the garment factory, you will be paying NSRL on threads, buttons, fabrics – that is what you would be paying the NSRL on, and I think people can live with that. However, when you have to pay NSRL on all their wages, on all the rent, electricity, rent, NIS [National Insurance Scheme contributions], it just cannot work; it is unfair,” he said.

Straker, who operates a textile and apparel company, reported that sales since July 1 were down 20 per cent.

“It is only obvious that if sales are down you can’t continue to pay your expenses, so I am really begging and pleading to please consider…this NSRL that is implemented on the manufacturers in this country.”

President of the Barbados Chamber of Commerce and Industry Eddy Abed said his members was not asking for the NSRL to removed entirely, but said Government had to provide answers about the tax as he raised concern that it was not enough to solve the country’s economic woes.

“We would like to get to understand some of the reasoning behind why it came about…what amount of revenue it will be able to incur now, since certain omissions have been made from the basket of goods….So, in our minds, as much pain as this is going to cause,  it still is going to fall short of the mark; hence they may well be additional revenue measures that have to brought in.

“We don’t know because there is uncertainty. We operate in an environment where there is not enough information so that knowledgeable and reasonable interjection that can be made,” he told the meeting.

  • Countries: Barbados

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