In his column in the 14 April 2017 edition of the Daily Nation column, Clyde Mascoll begins paragraph 6 as follows: “The tax policy of the Government is a perfect example of arbitrariness.”
The fiscal policy decision to raise VAT from 15% to 17.5% has been maintained despite the BLP 2018 manifesto ‘pledge’ on page to return VAT to 15% within 18 months. The 25% withholding tax on Registered Retirement Saving Plans (RRSP) has been retained and Mascoll has also been retained in a prominent role as an economic advisor in the Mottley administration.
Now Barbadians feel the weight of the fuel tax at the pump, the Garbage and Sewage Contribution (GSC) whether or not their homes are connected to the sewage system, the Amazon tax and the online tax on foreign currency transactions. Is there any difference between being assaulted by thugs in red or thugs in blue?
Barbadians have been migrating to purchasing goods and services online. The Mottley government in an effort to bolter government tax revenues enacted legislation to collect VAT on online purchases. Just this week the largely popular Amazon communicated to shoppers that “effective March 1, 202, “Amazon World Service (AWS)” would begin to charge VAT at a rate of 17.5% to Barbadian customers“.
The former Minister of Foreign Affairs and Leader of Government Maxine McClean and Leader of government business in the last administration made a very interesting contribution to the radio talk show Brasstacks on the 8 August 2019. Her contribution severely criticized government’s decision to write-off penalties, interest owed on VAT in the 1996 to 2000 period and a waiver of taxes from 2001 to 2017.
It was unfortunate the moderator of the program appeared ignorant about the subject matter and preferred to pressure McClean to finish her contribution which was valuable if compared to many who use the program to discuss issues boring to most listeners.
Here is the link that captures McClean’s contribution.
Writing a weekly column on a single subject (tourism) can certainly be challenging at times, especially when you tread that fine line, trying to extract meaningful answers to questions that some of us think should be a matter of public record, but that our politicians and policy makers feel should remain a dark secret.
You stand an enormous risk of upsetting some individuals who somehow often hold the power to negatively affect your well being, or who can influence decision makers that ensure you are held back or stifled in business dealings.
It comes with the territory and if you are going to be labelled as outspoken or controversial by a few, it’s something you have to get used to. Conversely, if our guardians of democracy were more open or candid, would it not benefit the country at large?
Just occasionally questions raised eventually get some attention, even if its years later.
A classic example is the recent disclosure questioning the accountability and payment of VAT (value added tax) by one of our tourism operators.
I raised this very point in the Tourism MATTERS column back on 16th December 2013, after a personal stay at one of the properties involved.
Fast forward almost six years and only after attention grabbing bold headlines detailing a class action suit, quoting the words ‘alleged tax fraud’ being initiated in the United States and disseminated globally is the matter finally receiving interest at the highest level?
Of course- in the case of Barbados- in the intervening period there has been a dramatic change of Government, but surely with the amount of potential lost taxes involved which could amount in this solitary location to at least BDS$20 million annually – any administration in a self -declared economically beleaguered state would surely want to rapidly deal with the problem and be seen to be doing so?
What puzzles many of us is that we as hoteliers in Barbados are required to submit VAT returns on a frequent and timely basis and if submissions are late, severe penalties with fines and interest are applied and enforced.
So how would it be possible to avoid this legal obligation for so many years without full Government knowledge and possible complicity?
Returning to the start of this column, are ‘we’ wrong to raise these questions and reasonably expect credible answers?
Unless these areas of concern are addressed in an absolutely transparent manner, there will forever remain the belief there is one law applied to some and a different one to others.
The startling revelation that Hal Gollop submitted an invoice in 2017 to the Barbados Water Authority (BWA) for 1.5 million dollars continues to raise eyebrows. See BU’s blog post – Hal Gollop’s 1.5 Million Dollar Invoice which went viral. It was also revealed that former Speaker Michael Carrington submitted an invoice to the BIDC for $706, 450 for providing legal services relative to “the $32M sale of a BIDC at Lot A1 Newton Business Park, Christ Church to Gildan Activewear Properties (BVI) Inc. in 2010. This is the same Carrington who had to be ordered by the High Court of Barbados to pay a septuagenarian client his money. See BU’s blog post Tales from the Courts–Justice Jacqueline Cornelius Makes Speaker of the House Michael Carrington PAY XXIV.
In response to a query from the blogmaster whether the incumbent Barbados Labour Party (BLP) government can challenge the invoice, BU family member Artax shared the following:
I read in today’s Mid-week Nation [15 August 2018] that, while speaking in parliament yesterday, Ronald Toppin queried the fee of $706,450 former Speaker of Parliament Michael Carrington charged BIDC……..
………for providing legal services relative to “the $32M sale of a BIDC at Lot A1 Newton Business Park, Christ Church to Gildan Activewear Properties (BVI) Inc. in 2010.
Toppin said based on his calculation of the scale of fees, the legal fee paid for the BIDC property sale should have been $322,500.
David BU, it becomes more interesting.
According to Toppin, subsequent to the conclusion of the land sale in 2010, Carrington wrote a letter to the BIDC in 2011 in which he indicated that…… at the time the transaction completed…. he was NOT registered for VAT……..
……….and requested the BIDC pay the VAT Division on his behalf……..the VAT of $92,146 his legal fees incurred.
As a QC (and LEC qualified lawyer….. hahahahahaha), Carrington’s earnings would obviously have been above the VAT threshold of $80,000…….hence, in keeping with the VAT laws…..he should be VAT registered.
The dishonest Carrington…. not being VAT registered…… expected the taxpayers to pay on his behalf…….VAT of $92,146 he incurred on his legal fees.
Perhaps the BLP may do something about Gollop’s invoice……..
……… especially if one takes into consideration that one of the services rendered as listed on the said invoice was for preparing a conveyance for the project site to Innotech…….under circumstances where a conveyance was NOT necessary……..
…………because the project site was owned by the NHC…
The reason why Carrington wanted the BIDC to pay the $92,146 on his behalf was because BIDC was obligated to issue him a “goods and services” slip as required by the BRA (Inland Revenue at the time).
And an amount of $709,450 BIDC paid to a service provider, would obviously incurred VAT……and “open a can of worms” for the goodly gentleman.
A check of Carrington’s tax records would have revealed he was not registered and since the fee was above the $80,000 per annum VAT threshold, non payment of the VAT portion would have incurred interest and penalties…….
……..and perhaps an audit of his earnings from 1997 to 2010 to determine if he filed VAT returns and the amount of VAT he did not pay to the VAT Division as required by law.
Now that the dust has settled regarding the National Social Responsibility Levy (NSRL) I would like to add my two cents to the debate. All countries have always had to depend on taxes to run their country and clearly, the Value Added Tax (VAT) did not accomplish what it was intended to do. The main reason why it failed is because the government did not have total control and several businesses refused to pay the VAT after collecting it. If it was being efficiently collected, there would be no need to create the NSRL tax.
Now that a tax has been implemented which affects everybody and that businesses cannot get away with ‘murder’ as they were accustomed, they will continue to cry out because they all have to pay the NSRL up front now that the government has greater control over its collection.
My advice to the Minister of Finance and the government, now that you have a cash cow and sound method of everybody paying the NSRL tax, remove the 17.5 VAT tax completely and increase the NSRL tax to 15% and this would ease the burden on the taxpayers and the guaranteed tax collection from all, especially the businesses and more so those unscrupulous business owners.
While I am at it concerning taxes and that the country is faced with all sorts of people dumping their garbage all over the country, especially the gullies and other places. I would like to suggest to the government that they impose a 2% waste disposable levy on all large, small appliances and electronics. This way the owner pays up front for the disposable when it is no longer functional and has to be disposed of.
I would hope that since the country is about to move into election mode that the current government does not wait until the last minute of the silly season to drop such a ploy on the people of Barbados such as dropping taxes to confuse the masses as they did the last election with the old woman and the bus advertisement.
Changes to the so-called basket of goods have left consumers worried that they might not be able to afford to feed themselves and their children as they will be forced to pay more for the goods they need – Barbados Today […] Continue reading →
Over the last twenty five years, I believe our small company has been a model corporate citizen on Barbados. We have no outstanding debt to either Government or the private sector, yet next week we will be forced to go cap-in-hand and beg our bankers for an overdraft facility.
Why, you may ask?
Simply to be able to cover our expenses, while we await several VAT refunds totalling over $32,000, which have been overdue for as long as two and a half years. We are told that all the claims have been approved, but are ‘warned’ not to call the VAT office, to chase when payment will be paid. Of course, we have tried to approach Government discreetly by writing to two Ministers with responsibility for either VAT or small businesses, but weeks later, neither have bothered to respond.
The following is a communication which was sent to the VAT Office by Hotelier and social commentator Adrian Loveridge.
Adrian Loveridge – Owner of Peach & Quiet Hotel
On or before the 15 March 2013, we will be expected to pay over to Government the amount of $37,526.60 in Corporation taxes due for the last financial year . If we do not pay on time, then there will be an immediate fine of 5% of the amount due, which equates to $1,876.33 plus interest accrued of 1% per month or 18% annually, which is 3 times the latest rate of Government borrowings to sustain a bloated public service and pay for dismally failed projects like GEMS (Hotels and Resorts Limited) and the chartering of Carnival Destiny for CWC2007.
As a small business that has operated on Barbados for twenty five years and has honoured all statutory obligations, it is a significant amount of money. Yet the same Government has owed us outstanding VAT refunds of nearly $30,000 for up to two years. Of course they have not paid us any late penalty charges or interest.
Before going public, I have written personally to the Ministers of the various Government bodies involved, but up until today not received any form of response. It appears they feel they have no obligation to businesses that are successful, sustainable (through there own efforts) and those who have demonstrated viability over decades of operation. Yet week after week, it is almost impossible not to read or listen to endless rhetoric about the importance that small businesses will play in the recovery of our economy.
Acting Director of the VAT Division, Anthony Gittens
As a young man fresh out of school and a recent member of the work force in what was at that time a very placid public sector in beautiful Barbados, I evoked the ire of my boss who had consented to a day off, presumably through an acute case of diarrhea only to find me seated in the law courts, a favourite pastime I had developed back then. On the spot I was fired.
Years later in a different country and working in a much less tolerant society, I almost suffered the same fate as I pulled my truck to a halt on a Connecticut highway at the sound of the voice of one Clyde Mascoll on Brass Tacks this past week. For fear that the signal that feeds the Smart Phone might be lost, the dumb ass that owns the same made the decision that this load would have to wait. Even though I know full well that global satellite provides the type of scrutiny of which local politicians know nothing, I took the chance. I listened, I took notes and I concocted a reason why dispatch was not notified of what turned into a twenty five minute break.
Barbados was introduced to an increase in Value Added Tax on 1st December 2010 by Minister of Finance Chris Sinckler. According to the economic review of the first six months of 2012 released by the Central Bank of Barbados in July 2012, provisional estimates for the 2011-2012 fiscal year are that VAT brought in BDS$949.6 million dollars into the Treasury. On a whole, VAT contributed BDS$764.8 million of the BDS$1.2 billion in indirect taxes taken in by government last year – Read more.
The leader of Her Majesty’s Opposition, Mr. Owen. Arthur, at the recent BLP Convention held in the Queens Park, informed all, of a sure reversal of the 2.5 % Vat increase, when his party wins the next elections. This revelation has already left many DLP supporters in shock and awe, for they know such relief would only spell their demise. This welcomed and empathic committal, would take much of the burdensome strain off the backs of the people, and will bring true meaning to the DLP’s empty rant. “A community, not just an economy.”
So why is it that the DLP on coming to power, back in January 2008, with Foreign Reserves to the tune of $2.4 Billon, found it necessary two years later, to slap on a 2.5% increase in Vat? Not only did they collect an additional $100 Million approx. each year for four (4) years, but there was also the jaunty boast by the Minister of Finance Sinckler of $120 Million collected in excess last year. Excessive collections at the expense of increased unemployment, increased food prices, poor quality drugs and an overall decline in the standard of living of all Barbadians. Today, it begs the question was the increase really necessary? Why is it that we are seeing all the large scale extraction of monies from the people, yet no commensurate asset worth to show?
Barbados Today (25 May 2012) reports that a decision has been made to retain VAT at its current rate of 17.5% “until future notice”. Previously we had been promised that it would be reviewed about now. The Advocate picked the story up on its front page on 27 May 2012.
It appears that the rumour is true as the Parliament Order Paper for Tuesday shows Chris Sinckler moving a resolution on the First Reading of the Value Added Tax (Amendment) Bill 2012 which keeps the current rates from 1st June “until further notice”.
Unless I have missed it, and I hope I have, no Government Minister has had the good grace to tell the voters about their decision. Do they think we won’t notice?
The taxation assault that was unleashed on Barbados, has brought about what is occasioned today …a total slow down of the economy and negative or no growth pattern during the five year implemented. It was a mistake to increase VAT from 15% to 17.50% in order to bring additional revenue in a time of recession as was warned by Mascoll, Justin Robinson of UWI and Owen Arthur of the opposition. If I remember right, the analogy was to be likened to “an air plane taking off with four open parachutes”… It was suggested that this would stifle any growth, the struggling economy was stimulating on its own at that time.
Regardless of the warnings of these recognized economists, the tax increase was implemented with the predicted results…a barren economy..stagflation occasioned with increased inflation and a decline in”real” revenues.
Submitted by GoWeb Caribbean – (blog written by Caswell Franklyn)
Since the election in January 2008, I have refrained from criticising the DLP Government. As some have suggested, my silence had nothing to do with my becoming a member or supporter of the Dems. I have not. I wanted to give the new Government a chance to govern, without me as a distraction. I also felt then as I do now that the two alternate options offered by the BLP (Arthur and Mottley) were the worst possible choices to be prime minister, and I did not want my comments to be seen as giving aid and comfort to either of them.
While I do not want my criticisms to be of benefit to the current BLP leadership, I must object to some aspects of the 2010 Budget. I cannot understand the lack of informed opposition to the Budget. Either they remain on an extended honeymoon, or the country is convinced by the Government’s excuses for its failure to perform adequately by blaming their shortcomings on the global economic crisis.
The Minister of Finance has inflicted devastating tax increases that will hurt the poor and middle classes unnecessarily. Their apologists claim that those punitive tax increases are for the greater good. I have no difficulty if that were the case, but I remain unconvinced. If Government did not believe that it could get away with anything at this time, it would not increase the VAT rate now. Every effort should have been made to collect the millions that VAT registrants collected from the public and criminally put in their own pockets.
Chris Sinckler, Minister of Finance, Economic Affairs
Rookie Minister of Finance Chris Sinckler has delivered his first budget and admittedly it was at a difficult time. BU does not have the expertise to apply the required analysis to determine if it was a’ ‘good’ budget or not. Seems oxymoronic for people to be labeling an austere budget as good anyway.
Since delivering the budget Sinckler has had to to clarify or reverse a few of the financial measures which he announced. It is not unprecedented that a Minister of Finance would have to ‘tweak’ his budget but one senses that the impact of this budget has not been adequately assessed or anticipated.
As an example the following note was received from a BU family member.