How Barbados 22% VAT will raise BDS$14 million to create University Scholarships for Bajans

“We always knew that the bursary system was a temporary one at best and that we would have to find a permanent replacement for that by identifying . . . resources to assist in those circumstances.”

Barbados Minister of Finance and Economic Affairs Chris Sinckler commenting on the 22% VAT (Value added Tax) on Voice and data Calls from cellphones and other mobile transmitting services

Smartphones must be getting super popular in Barbados.

This as they've now imposed a 22% VAT (Value added Tax) on Voice and Data Calls from cellphones and other mobile transmitting services as reported in the article “Barbados hopes to raise millions from taxes on cellphone use”, published Wednesday, December 16, 2015, The Jamaica Observer.

 

The tax as announced by Minister of Finance and Economic Affairs Chris Sinckler goes into effect on Friday January 1^st 2016 and is intended to raise BDS$14 million, which translates to JA$840 million annually to fund University scholarships. The broad definition to include any mobile transmitting devices, implies they are also taxing any form of telecommunication, be it Voice or Data.

For those of you confused up to this point, I'm not from Barbados, but I like the island, begin as Barbados reminds me of Portland.

Rather, this is a telecoms article as it seems that smartphones and other mobile transmitting services must be HUGELY popular on this small island to even merit having a 22% VAT (Value added Tax) on Voice and Data Calls.

So what could these devices be that have attracted the attention of the Government of Barbados?

Barbados 22% VAT - How to raise BDS$14 million for University Scholarships funds for Bajans

The aim of the Barbados Government it to replace the recently implement Bursary Awards system implement back in 2014 to help some 3000 Barbadian students having difficulties at the UWI as noted in the article “Barbados govt offers 3,000 bursaries to help students attend UWI”, published Saturday, July 12, 2014, The Jamaica Observer. 

Good to note they've stopped receiving full support in paying UWI fees from the Government of Barbados since August 2013 as announced by Minister of Finance and Economic Affairs Chris Sinckler as noted in the article “Barbados Cancels Free UWI Tuition”, Published Thursday August 15, 2013, The Jamaica Observer.

Naturally, being UWI students, they mounted protest as paying as much as BDS$65,000 or JA$3,908,112 per annum was beyond the pocket of many of the parents of this really, really small island as noted in “B'dos students to pressure gov't to reverse UWI fee decision”, published Tuesday, August 20, 2013, The Jamaica Observer.

However, these protests fell on deaf ears as the Barbadian Government, which was under financial strain, realized that some Barbadian could afford to pay for their children's UWI Tuition and may be abusing a system that was meant to emphasize the importance of education in building Barbados.

Also, many Barbadians who got access to free education did not return to Barbados to build the nation, opting to leave the country altogether for place that offered better job prospects such as the US of a, Trinidad and Tobago and Jamaica.

This brain drain clearly had to be stopped as it could not be the case that Barbados was giving free education to its citizens only for them to leave the island and help the developement of other countries such as Jamaica!

So for two (2) long years the students form Barbados, even those attending Cave Hill Campus to do Law had to pay what was previously a free ride through UWI. Until now!

Barbados copies Jamaica Telecom Tax – Cellphone Ban backfired and copying Jamaica

Fast forward to December 2015 and the Barbadian Government, apparently noticing the increased use of smartphones among Barbadians, is taking action.

In fact, Bajans in school love smartphone so much that Minister of Education, Ronald Jones, had to ban them from all nursery to secondary level earlier in June 2015 as reported in “Govt reconsidering cellphone ban”, published June 20, 2015, Barbados Today. 

They only recated after public pressure from parents, who now have to sign a comprehensive new code of conduct prepared by the Ministry of Education as noted in the article “Students may get the okay for phones”, published 18 October 2015 by Roy R. Morris, Barbados Nation News.

Since Smartphone and other mobile transmitting services e.g. tablets, phablets, Laptops and chromebooks most likely, were becoming more popular, a VAT on their usage seemed fair. The VAT is to be used to create a University Scholarship fund to help the genuinely needy Barbadian students to attend UWI.

This 22% VAT sounds a lot like the Jamaican Tax on Cross Network and International Calling implemented back in May 2012 as explained in my blog article entitled “GOJ taxes Telecom Providers and OUR sets Cross Network and International Calling Rate at JA$5.00”.   

Back then there was a lot of protest, mostly from the Telecom Providers.

Jamaican Telecom Providers eventually accepted the Telecom Tax, especially as it was going towards the USF (Universal Service Fund), the Telecom Fund for Education and bringing CAP (Community Access Points) for Internet across Jamaica.

It also funds the TIS (Tablet in Schools) Programme which will be changing gears come January 2016 with a focus on Primary schools as noted in my blog article entitled “700 Tablets for East Kingston and Port Royal Primary Schools - Why Raspberry Pi Zero Great for Jamaican Secondary Schools”.

Barbados copying Jamaica - Helping Barbadian UWI and expanding the Internet to all

The Barbados Government, recognizing that the Jamaican Tax on Cross Network and International Calling is working, since 2012, is keen to implement such a similar measure in Barbados.

However, Minister of Finance and Economic Affairs Chris Sinckler was cautions in its announcement, as they did not want the tax to slow down the growth and usage of smartphone, phablet and other mobile transmitting services on the island, quote:  “Government has to be very mindful of not acting in a manner as to put a brake on the productive advance of cellphone and mobile technology in our economy, because it is such an important part of doing business, making business more efficient and accessible”.

Hopefully, the 22% VAT on Voice and Data Calls from cellphones and other mobile transmitting services will benefit the Barbarians. This was clearly on Minister Chris Sinckler mind as the was also thinking of the future when he made this declaration in parliament, quote: “All of these things were in the back of the minds of the administrators and policymakers, certainly in my mind, when we were thinking about the imposition of this particular tax”.

I’d also recommend that the make it mandatory that VoIP provider have to apply for a Telecom License in order to terminate voice Calls in Jamaica as Jamaica’s Minister of Science Technology Energy and Mining has pointed out in my blog article entitled “Minister Paulwell says VoIP Providers must Register to Terminate - Why WhatsApp may no longer be Free as IXP by January 2015, MNP by May 2015”. 

With this initial step, Barbados will push the country forward, both in terms of increased financial assistance to Barbadian UWI students as well as expanding Internet access across the Island of Barbados.