Progress being made

 

Barbados has modernised its legislation, upgraded its policy framework and broaden its network of partners across several countries and tax administrations to ensure that not only is the national space secured, but there is no room for tax avoidance, money laundering, the financing of terrorism or any other illicit activities.

 

That’s according to Minister of Finance and Economic Affairs, Christopher Sinckler, who told those attending the opening of 37th Commonwealth Association of Tax Administrators (CATA) Annual Technical Conference at the Hilton Hotel, held under the theme ‘Enhancing Tax Compliance through Strategic Alliances’, that Barbados’ progress in this area has seen the country assume leadership roles in both the Organisation for Economic Co-operation and Development (OECD) and Financial Stability Board processes.

 

“Just as recent as last month the OECD upgraded our status to largely compliant with the requirements of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes. Indeed, further to this, we are one of the few jurisdictions across the developing world to have successfully completed two full FSAP [Financial Sector Assessment Programme] reviews and are poised to undergo a third one very soon,” he added.

 

These efforts, the Finance Minister said, has assisted the country in building an international tax jurisdiction that is stable, transparent and particularly co-operative with international norms.

 

“And this has been good for us, as it has been for other countries in our region that have followed similar routes, in that it has allowed us to continue to operate a relatively viable international business and financial services sector,” he added.

 

He spoke to this success, even as he referred to the Article IV consultation report from the International Monetary Fund, which noted the loss of $200 million in tax revenue per year from the operations of the international business and financial services sector, due to challenges and policy changes in some of the key source markets which has driven down business opportunities in the country. He said however that this reality would not have come as any surprise to those who paid attention to the many speeches and papers which were delivered or penned by policymakers or tax practitioners.

 

“Indeed, in 2014 during an Estimates presentation in the honourable House of Assembly in Barbados, I was at pains to point out to Barbadians that stemming from the time of the 2008 fallout from the worst financial crisis in the post modern globalization era, through the major adjustments to the Canadian domestic financial legislation, Barbados’ economy had lost more than $1 billion in tax revenue over a five-year period. Revenues that previously were used by successive governments to improve and maintain infrastructure, support major social investments in health, education, public transport and national security, as well as to give generous tax cuts to a growing middle class, while removing several among the working poor from the tax rolls,” he explained.

 

As such, he made the point that when engaging in discourse about debt and deficit, revenue and expenditure, it should be done from an “informed perspective”, facing the “sobering reality” that for a small, resourced constrained and highly vulnerable economy like ours, adjusting to such a massive loss of revenue capacity will neither be easy, nor quick.

 

This, he said, lead to Government pursing a programme of fiscal consolidation aimed towards bringing its revenues and expenditure more in alignment, and of tax and financial administrative reform across the public services of the country. He noted these efforts are all at advance stages of implementation and with varying degrees of progress and success.

 

He made the point while noting not all have agreed with the approaches taken, and as such suggested that it is important to come up with comprehensive plans to ensure that progress will continue.