Crystal Drakes wants VAT reduction and fuel tax relief

Crystal Drakes VAT reduction

Crystal Drakes wants VAT reduction and fuel tax relief

Economist Senator Crystal Drakes has offered alternatives to some of the key financial measures outlined in the national budget, including a reduction in the Value Added Tax (VAT) and fuel tax relief for fisherfolk.


VAT Cap considered by Barbados Cabinet

The independent senator made the suggestions as she contributed to the debate on the Appropriation Bill 2022 in the Upper Chamber on Friday.

Starting with the cost of freight which was capped at $7,350 per 20-foot container and $8,000 for 40-foot containers, intended to shield consumers from rising prices, Drakes cautioned Barbadians that the measure was unlikely to deliver any substantial savings.

She explained that freight costs will be capped on 2019 levels for the purpose of calculating customs duties and businesses will still have to pay the freight costs which they will pass on to consumers.

“So yes, the savings may be in the customs duties that you have paid but is that going to be proportionate to the level of inflation that we are going to see globally? For Barbadians to feel the savings, two things have to happen – the level of savings has to be that much higher than the rate of increase to the prices coming down the pipeline, or two, the private sector in their benevolence, don’t pocket the savings and put it on the profit line, but pass it on to consumers.”

“I caution Barbadians somewhat in thinking that they are going to see this drastic reduction when they go out to shop,” she added.

Drakes suggested the Mia Mottley administration should have slashed the 17.5 per cent VAT to assist consumers.

“When you reduce the 17.5 per cent VAT to 15 where it ought to be . . . the Government would have lost about $26 million, VAT receipts are in excess of $1 billion projected for the financial year ahead.”

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Senator Drakes went on to tackle the Pandemic Contribution Levy that will see workers earning above $6 250 per month or $75 000 per year paying a rate of one per cent of their income, starting April 1, for 12 months. Specified businesses that made more than $5 million income in 2020 and 2021 will also be required to pay the tax at 15 per cent of their profits.

Economist offers VAT reduction, fuel tax ease as alternate Budget measures  Barbados Today

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Dean Nestor

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