Business Monday: Budget effects

THE increase in commercial water rates may result in some companies passing this increase on to the consumers.

In addition, the increase in bus fares could impact the average person.

These are the views of Deloitte an accounting firm, in its analysis of the Budget presented last week by the Prime Minister, Mia Amor Mottley.

Ms. Mottley announced that commercial water rates will move from a fixed rate of Bds$4.66 a cubic meter for up to 40 cubic meters and any excess then at Bds$7.78 with a monthly cap of 12 000 cubic meters.

However, the firm said that this increase in commercial water rates may result in companies passing the increase to consumers.

“In keeping with the Government’s policy to protect the vulnerable in the society, it will need to monitor the many developments in this regard,” said Deloitte.

As for the increase in bus fare, this will become effective April 15, 2019, with the fare moving from two dollars to $3.50. However, it remarked that there will be discounted passes and transfers for frequent commuters.

According to Deloitte, the higher bus fare was inevitable and should aid in the Transport Board’s effort to become amore efficient state-owned enterprise.

The increase from $1.50 per trip could impact the average person, but without information on the discounted rates, the true effect maybe unknown, it said while pointing out that the consolation is that the concession given to schoolchildren remains.

Among the several other areas of the Budget which Deloitte has touched on, are the plans by Government to reclassify zero-rated supplies to exempt supplies, and the legislation to begin the collection of the Value Added Tax (VAT) from e-commerce.

On the reclassification, Deloitte reasoned that companies will no longer be able to reclaim VAT on inputs and that this could impact their bottom line.

“However, the measure should achieve government’s intention of reducing its administrative burden and improving cash flow,” it noted.

As for the proposal to collect VAT from e-commerce, the measure is set to increase Government revenues by approximately Bds$7 million annually for further spending for positive social work.

“The Barbados Revenue Authority (BRA) will impose tax on transactions where this is a high certainty of goods, such as hotel rooms, villas and rental vehicles,” said Deloitte.

“For the avoidance of any doubt the intention is that there will be no double taxation so once a persons demonstrates that they have suffered tax on a transaction, there will be no double charge,” it explained.

It added though that in any way this should clarify any ambiguity surrounding the measure when it was announced in the mini budget last June.