Officials of the Small Business Association (SBA) are calling on Government to remove the two per cent foreign exchange tax on online transactions and review the policy for payment of national insurance contributions for self-employed individuals.
These are among a range of short- and medium-term policy intervention measures proposed by the association to help drive down operating costs for micro, small and medium-sized entrepreneurs (MSMEs) and incentivise entrepreneurs to pay into the National Insurance Scheme (NIS), which has come under scrutiny in recent times.
“Remove the two per cent foreign exchange tax on online transactions and the sewage levy for specific sectors (agriculture and manufacturing) to assist with reducing the high cost of doing business,” said Chairman of the SBA Neil Corbin, who presented the Board report 2021-2022 on behalf of the board of directors during the association’s 29th annual general meeting today.
According to the board of directors, another short-term relief could include a review and amendment of the policy framework for the payment of national insurance contributions by self-employed individuals.
“A benefits regime is required to incentivise business owners to be more compliant in paying into the insurance scheme,” it said.
However, with these and other policy intervention proposals and request for stimulus support submitted in 2020 yielding very little results to date, Chief Executive Officer of the SBA Dr Lynette Holder told Barbados TODAY she was somewhat disappointed at the slow pace at which Government was moving given that the issues raised were critical to the survival of the MSME sector.
Singling out the proposal for the NIS review for self-employed individuals, Holder said while the SBA was encouraging members to pay because there were long-term benefits, they were concerned that “there is no immediate benefit”.
Close to half of the association’s nearly 1,000 membership is made up of self-employed individuals.
“If I am a female-owned business and it is just me and I take sick, there is no health benefit for me as for an employee in a firm. A self-employed female can’t access maternity benefits. So those kinds of things. There are no immediate benefits . . . We need to have a discussion on this because this is one of the issues that came up and we saw it glaringly when the COVID-19 pandemic hit,” she argued.
“We felt we could have had some discussion on them but I am a bit concerned, a little disappointed even, that we have not seen the progress towards some of these. I am not naive to think that all of these could be operationalised but I think there are some that definitely we could have engaged conversations around to see how we can improve the enabling environment for the sector,” said Holder.
In the report, the SBA Board noted that while it had lobbied the government on a number of policy intervention measures
during the height of the COVID-19 pandemic and there were some initiatives that
were done, albeit with “varying outcomes and degree of success”, more intervention was required.
Among the short-term policy proposals is for the extension of the cap on loans provided by the Barbados Trust Fund Ltd. from $10,000 to $15,000, which they argued would “incentivise more entrepreneurs to enter the market.
The SBA Board also called for the introduction of regulation to incentivise the digital transformation in business, noting that in addition to smart cities, online payment platforms should be facilitated, and electronic commerce enabled through regulation of the commercial banking sector.
“Additionally, public/private partnership should be incentivised to provide training to business owners in the use of technology to support the development of mobile apps and/or other digital footprint, for SMEs to better interface with government departments in the payment of bills, provision of data, and the promotion of products online,” it added.
Over the medium term, the SBA said Government could introduce legislation to provide for number portability to enable SME owners to have greater flexibility in the use of their telephone numbers for business.
The SBA is also calling for resources to assist micro and small firms to conduct audits and retrofit their operations with viable renewable energy options, as well as the establishment of an Innovation & Growth Fund for firms to access grant funding and/or low interest loans between one and two per cent, for operational requirements.
The board has also called for the introduction of “relevant” procurement regulations to set aside a percentage of Government’s goods and services to SMEs using technology as a platform for procurement, measurement and evaluation of the procurement regime.
It also recommended the introduction of legislation to provide for a tax incentive for firms that invest in research and development that led to new products for the domestic market and/or the internationalisation of existing product offerings.
“Amend the Cooperative Societies Act to allow for corporate membership within credit unions and the relevant regulations for the provision of business lending for corporate members,” the SBA board added.
The report also outlined that it had concluded its Strategic Plan for the period 2022 – 2025 called VISION 2025. This will provide a roadmap for the recovery period post-COVID-19, and focus on four thematic areas – research and advocacy, capacity building, resource mobilisation and membership support services.
“It is now not a case of if, but when, for the survival and transformation of the MSME sector,” said the SBA.