Sunday 17 December, 2017

Simpson-Miller: Increased taxation not the answer

Former Prime Minister of Jamaica, Portia Simpson-Miller receiving an award from the President of the Barbados Small Business Association, Dean Straker.

Former Prime Minister of Jamaica, Portia Simpson-Miller receiving an award from the President of the Barbados Small Business Association, Dean Straker.

Former Prime Minister of Jamaica, Portia Simpson-Miller, has urged regional governments to look at the big picture when designing their tax regimes.

Simpson-Miller was in Barbados this week to deliver the 8th Annual Sagicor Leo Leacock lecture as part of Small Business Week on Tuesday night, on the topic, ‘Exploring a New Paradigm For The Survival of SME’s’.

She urged governments in the region to resist the urge to be “pennywise and pound foolish”, recognising that increased taxation hardly ever produces the desired results.

“While taxation may provide Government with short-term revenue, it is burdensome and acts as a distinctive disincentive and may have the opposite effect of stagnating business development. It is time to change the conversation.”

In order to spur growth within the sector, she suggested the Barbados government adopt an initiative as was done in Jamaica through “special and differential treatment” for small and medium-sized businesses to build productive capacity.

“A good starting point could be that special consideration is given to MSME’s in the area of procurement of goods and services for the public sector. The fact is that without special and differential treatment MSME’s would not be able to compete with big businesses,” she recommended.

She suggested this policy could also be implemented across the board in all Caribbean countries as a way to make small and medium-sized businesses more competitive against large enterprises.

Simpson-Miller also said governments need to address other challenges affecting the SME sector such as a lack of finance. She said there needs to be further policy development and legislation which would encourage lending by financial institutions to entrepreneurs and small business owners.

The Barbados Government has come under heavy criticism ever since the announcement of an increase in taxes during the May 30 budget. The increase from two to 10 percent of the National Social Responsibility Levy (NSRL), in particular, has seen the most resistance with many private sector associations calling the tax burdensome.