Barbados Will Gain Extra $1.2 Million From Bank Asset Tax In 2003

by Amanda Banks, Tax-News.com, London

21 March 2003

The Barbados government will accrue an extra $1.2 million in tax revenue from bank assets, according to the Estimates of Revenue and Expenditure.

The tax, which was introduced in 1983 and is being phased out in 2004, is likely to collect $9.5 million in its final year of operation. This compares to $8.3 million paid into the state coffers in the year to March 31.

Prime Minister, Owen Arthur has said that it is necessary to phase out the tax due to the introduction the deposit insurance scheme announced in last year's budget. The thinking behind the move is to prevent unnecessary cost burdens on the private banking sector.

The Estimates of Revenue and Expenditure are currently being discussed in the House of Assembly where the controversial issue of FSCs was also raised, according to a Barbados Advocate report. Some $900,000 is forecast to be received from this scheme this year, though it is thought this could have been a potential $1.6 million if it were not for the diplomatic wranglings between the EU and US on the subject. As a result of EU objections to FSCs, which it sees as giving the United States unfair export subsidies, the WTO ruled them illegal, and they are being phased out.

The government is expected to run a budget deficit in the 2003/2004 financial year. Spending is estimated at $2.34 /billion, with revenues forecast at $1.78 billion.

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