What’s in it for Me?

The SBA hosted a sensitisation session on the mini-budget, recently presented by the Minister of Finance & Economic Affairs and approved by the Parliament of Barbados. 

The purpose of the session was to consider the implication of the Budgetary Proposal and Financial Statements on the small business sector.Mr. Shane Lowe, president of the Barbados Economics Society, made the presentation, which included an overview of the budgetary proposals, the impact on Barbadians in general, and micro, small & medium enterprises in particular. Mr. Lowe defined the recent trends in the fiscal performance of Barbados, outlining the insufficiency of annual revenues to meet the recurrent expenditures of government, compounded by the decline in foreign reserves.

The presentation also included a discussion on the International Monetary Fund’s recommendations which suggested inter alia, a reform of state-owned enterprises to cut transfers and subsidies and eliminating the central bank funding of government to reduce the downward pressure on foreign reserves.

The budgetary proposals’ impact on the MSME sector, of which 30% were in retail & distribution, was a balance of improved profitability on one hand, and lower profitability on the other. Taken as a whole, the net effect was dependent on the sector within which the firm operated. Whereas retail and distribution stood to realise a positive net result from the measures, businesses in the transport sector and agriculture may realise a negative impact. The enclosed provides a breakdown of the key measures affecting the sector.

 

 

 

JUNE 2018 MINI-BUDGET – IMPACT ON MSMEs

Improved Profitability/Access to Financing

  • Removal of NSRL
  • Introduction of Trust loans worth up to $5,000
  • 50% reduction in annual registration fee for commercial vehicles
  • Waiver of penalties and interest on taxes due between 2000 and 2017

Lower Profitability/Access to Financing

  • 1% Health levy paid by employees
  • Garbage and Sewage Contribution: $1.50/day applied to water bills
  • Fuel Tax levied at 40 cents per litre of petrol and diesel and 5 cents per litre on kerosene
  • Highest corporate tax rate up to 30% from 25%
  • Taxes levied on tourism sector
  • New 40% personal income tax bracket for annual income >$75,000

 

The meeting further discussed the next steps for the local economy which include further reduction in government expenditure and strategies to accelerate economic growth, particularly among the productive sectors.