EDITORIAL: Looking to the future; NSRL now history

IT is now approaching exactly one month since the National Social Responsibility Levy (NSRL) went through the door, raising hopes that businesses and consumers will eventually find prices more affordable. The long and short of this is that the NSRL, considered as everything wrong, was mainly responsible for the high prices consumers were paying.

The tax came to an end on July 1 this year, in accordance with the commitment the Barbados Labour Party had promised during the general elections. Therefore with the removal of the tax it is assumed that a wave of price reductions would surface, therefore allowing consumers to shop in comfort and their dollar to stretch further. The target for the price reductions is two months after the end to the tax. In any case the Fair Trading Commission has the task of monitoring prices to ensure there will be no price gouging, which is known to exist in Barbados, NSRL or not.

In the debate of the Senate last month (and this Chamber was chosen since there are divergent views and opinions as opposed to the House of Assembly where all 30 members are from the Government), a lot was repeated about the NSRL. Some of the comments raised in a debate in that place went from the view that the tax was not good for Barbados, it was making businesses uncompetitive, it was causing hardships to consumers and in particular workers who had gone for almost ten years without a pay increases and so on and so on. Also, in that debate was a comment that during the time the tax was in place there was no growth in the distribution sector, which in fact contracted. Even the former Governor of the Central Bank of Barbados Dr. Delisle Worrell complained long before its removal that the NSRL had stunted growth in the economy in 2017 and if it was not in place the economy would have expanded by at least 1.5 per cent instead of the one per cent recorded last year.

The previous Government which had introduced the tax first as two per cent, and then extending it to 10 per cent, reasoned that the aim was to dampen the demand for foreign exchange of which Barbados has a very low stock in its coffers, along with a two per cent commission on foreign exchange. Having seen the country’s foreign exchange reserves dwindled repeatedly since the 2013 elections when there was a massive $50 million outflow in the space of a few months, it was thought necessary to do something about the outflow and that was one of their answers to the problem. There were some economists who viewed the NSRL as necessary in the context in which it was introduced and why removing it would not have made much sense if Barbados is to see through the crisis. Yet the concerns raised by the private sector which was very vocal and those by the general public became very wide spread.

The final rites to the tax have been done. It is now history. We therefore look forward to some low prices in the future.