Barbados -E&Y: Removing VAT would spell disaster

REMOVING VALUE ADDED TAX (VAT) would be a disaster for any government, in the professional opinion of Ernst & Young's tax department senior manager in Barbados, Mark Shorey.

The British-trained taxation expert formerly with PricewaterhouseCoopers was responding to recent suggestions that Government remove VAT to ease the cost of living in Barbados.

"To remove VAT, the Government would have to look for another source of revenue and it may have a more serious impact on the cost of living . . . . VAT has been tried in more than 150 countries in the world. It would have its detractors, but when you look at it, it is the best form of indirect taxation," he said.

According to a recent SUNDAY SUN poll the cost of living was among Barbadians' top concerns, and the People's Empowerment Party has recommended, among other things, that Government remove VAT on all goods.

Speaking to BARBADOS BUSINESS AUTHORITY last week after two days of updating Ernst & Young clients on VAT, Shorey said VAT had relieved Barbadians of "phenomenal taxes" since its introduction ten years ago.

VAT has stripped 120 to 200 per cent tax rates off consumer goods, including import duties as high as 45 per cent, a 20 per cent stamp duty, 49 per cent consumption tax, an environmental levy and a surcharge, said Shorey.

He pointed out that the VAT regime had also allowed Government to give low income earners reverse tax credits. In addition, consumers could pay less consumption tax by avoiding or modifying their use of certain products and services. (SR)