The Grenville Phillips Column – Paying the Piper

Grenville Phillips II, leader of Solutions Barbados

Tax on companies is called corporate tax.  Tax on personal income is called income tax.  In 2015, the Government received $210 Million from taxing companies and $452 Million from taxing individuals’ income.  The Government also received other taxes from individuals.  For example, much of the $811 M from VAT and $150 M from property taxes.

Companies normally receive significantly more revenues than what workers collectively earn.  Therefore, why must workers carry more than twice the tax burden as companies?  The answer lies in a ridiculous legally permitted loophole that all companies are instructed to exploit.  The Government of Barbados has decided to tax companies on their profits.

A company sells products and the total amount earned is called revenue.  However, the company had to pay for materials and labour to produce the products.  The costs that a company spent to produce the products are called expenses.  When expenses are deducted from revenue, the result is called profit.

Since the Government of Barbados taxes profit, the reasonable aim of company owners is to reduce the amount of profit in order to reduce the amount of taxes that must be paid.  How can a company reduce profit and still grow the business by selling more products and making more revenue?  Profit can be reduced by inflating expenses.  How can expenses be inflated?  There are diverse ways, including claiming any personal expenses that can reasonably be justified as company expenses, and claiming investments in new products.

There are many personal use items that can be justified as necessary for a company to develop and sell company products.  Such items may include: cars, cell phones, clothes, lunches, dinners, gym memberships, home help (eg. maids), home maintenance (eg. gardeners, painters), caterers, donations, overseas travel, taxis, overseas hotel costs, tools, furniture, appliances and utility bills.

A company may invest in a new building and new equipment to increase the number of products that can be developed in the future.  However, even though no products have been developed from this investment in the taxable year, the Government allows the company to include this spending in the company’s expenses for that year.  This will significantly reduce the company’s profit, and therefore, the taxes to be paid.

If company expenses balance or exceed revenue, then companies with very high revenues can legally avoid paying taxes for decades.  Since the Government needs revenues to fund social services such as education and health care, then instead of asking companies to share the tax burden, the Government instead increases the tax burden on individuals.

`Why is the Government so afraid to fairly tax companies?  One likely reason is that companies have admitted to giving money to political parties’ election campaigns.  Such contributors normally qualify as proverbial pipers.  In the 2013 general election, the BLP candidates reported spending approximately $1.2M and the DLP candidates reported spending over $1M.  The winning candidates spent an average of over $41,000, while the losing candidates spent an average of over $33,000.  Is there a better and more equitable tax policy that is not influenced by the pipers?

Solutions Barbados published its fair tax policies over 2 years ago and they have undergone over 2 years of rigorous public scrutiny.  It is proven that when taxes are low, simple to calculate, easy to pay, and easy to check for compliance, governments normally receive more revenues.  Therefore, corporate tax rates will be reduced to 10%, and applied to revenues with no deductions.

In a Solutions Barbados administration, companies can avoid the wasteful costs and effort required to inflate their expenses to trick the current system, and they will finally be allowed to equitably share the national tax burden.  It will also allow personal income tax rates to be reduced to 10% with no deductions, and VAT and the NSRL to be abolished.

Since Solutions Barbados is not funded by any of those entities who fund the BLP’s and the DLP’s political campaigns, we have no such pipers, and can do what they simply can never do.  This includes implementing policies that can allow Barbadians to finally prosper, rather than simply appearing to.

Grenville Phillips II is the founder of Solutions Barbados and can be reached at NextParty246@gmail.com
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46 Comments on “The Grenville Phillips Column – Paying the Piper”

  1. Chad99999 July 30, 2017 at 2:51 AM #

    Suppose I own and operate an incorporated business with a 9% profit rate in Year 1. Suppose further that I have annual sales of $1,000,000, my profit is $90,000, and I pay a corporate tax rate of 40%. In Year 1, I will have to pay $36,000 in corporate tax.

    If in Year 2 there is an economic downturn , and my profit margin drops to zero, because revenues and expenses are both $80,000. I will pay no taxes at all, which is good because I wouldn’t have the cash to pay. That’s the beauty of the current system.

    Now let’s rerun the numbers under Grenville’s proposal. In Year 1, I would have to pay $100,000 in taxes, and I would be in deep trouble right away, because my profit is only $90,000. In Year 2, I would be in debtor’s prison, because I would owe another $8,000 in taxes, and I would have no money to pay.

    In other words, this tax proposal is asinine, and Grenville is nuts.

    Like

  2. David July 30, 2017 at 6:31 AM #

    Are the candidates not able to articulate in public fora on the issues?

    Like

  3. Sunshine Sunny Shine July 30, 2017 at 7:31 AM #

    Chad999999

    You are a real shite for trute trute tho. There are times when you can make some sensible contributions and other times when are a total goat looking for a stake that is already at the end of the rope tied around its neck. You have completely ‘rerouted’ what Granville have said to make it appear that his assessment is stupid, and you the bright shite, just because you friggin well can. Who the shite benefits, besides the corporate, when he does not pay his taxes base on a the stupid system of taxing profits- a most amorphous concept? What Granville stated is perfectly correct, a certain degree of manipulation can easily affect profit margins to make it appear marginal or insignificant so as to reduce taxes or pay none at all. Yes a company in the beginning stages might not make significant profits in the first year to pay taxes base on a system of income earn alone, but this is where various tax classifications can come into to play to ensure that any and every corporation pays some form of taxes. There is nothing wrong with a tax classification that addresses a two way tax system that can incorporate taxes on income and profit earnings. How the heck can Granville proposal be shite when yours is base on bare jobby?

    Like

  4. David July 30, 2017 at 7:38 AM #

    There is no right or wrong approach to how a tax system should be designed. It is more a philosophical one. There is the view that companies should be encouraged because the more healthy the commercial climate is enabled labour will benefit with the necessary supervision of course.

    Like

  5. Crusoe July 30, 2017 at 8:13 AM #

    I sort of get where Grenville is coming from, however, I disagree (not going to be as blunt as Chad).
    Chad has put a very simple example, but the crux of his point is right.

    Taxing on profits is an internationally accepted practice. It works because one assesses the ‘true’ net income of a company, what the company has earned.

    The revenue of a company is not ‘earnings’. The earning figure is the net income.

    Now, how we get to the net income is what Grenville has an issue with.

    Yes, there are allowable expenses, however, those are stipulated per the legislation and where for example, a company invests in equipment, the company is allowed to set a percentage as an expense against the revenue for a specific time period, number of years.

    Grenville’s statement that follows is misleading : ”A company may invest in a new building and new equipment to increase the number of products that can be developed in the future.  However, even though no products have been developed from this investment in the taxable year, the Government allows the company to include this spending in the company’s expenses for that year.  This will significantly reduce the company’s profit, and therefore, the taxes to be paid.”

    This gives the impression that a company can spend willy nilly on equipment and charge that as an expense. Not only is that ludicrous, as no one in their right mind is going to buy say, a new wood cutter, just to reduce chargeable income. They will buy it as an investment to make more furniture, even if such new furniture takes a year or two to get into the market.

    The statement is also misleading on how such is expensed against taxable income.

    The capital allowances allow for such to be charged at say, 20% per year for five years, as a reduction on taxable income. This is to match the expected use of the asset against the income that it generates. Which is quite contrary to Grenville’s statement.

    Now, onto VAT and indirect taxes.

    Grenville ‘talks’ about abolishing VAT and other indirect taxes. My question, will Solutions implement an alternative indirect tax?

    This is critical, because it points directly as to whether Grenville understands cash flows and income in the economy.

    I could leave it at that and await his answer, but I shall explain nevertheless.

    Much of Barbados’s problem is not reported revenue. It is revenue that is unreported.

    Whatever direct tax rate, personal or corporate, is allotted, there will be significant unreported income.

    There are only two ways to deal with this.

    One, is to tax this unreported income via indirect taxes, which effectively is taxing the income at the point of spending, if that makes sense. It has to be spent at some point, that is where you get it.

    These indirect taxes include VAT, taxes on gas and diesel, NSRL , customs duties etc.

    In my opinion, in Barbados’s economy, this is the most effective form of collection.

    The alternative, which many will balk at, is to hire more qualified auditors at BRA, enhance the rules on tax assessment and collection and do much more work on collecting undeclared income.

    I see two issues with this. Firstly, this is lengthy, will involve significant investment (many will balk at the required salaries to pay the qualified people, but if you want quality……you have to pay and relatively speaking that pay is peanuts compared to tax revenue) and the second issue, is time in court cases etc.

    Is that it is quite simply easier to include indirect taxes as a measure of revenue collection and remove the headaches of above.

    However, I am of the view that direct taxes can be lowered, while increasing indirect taxes where necessary.

    As Chad noted more bluntly, I am not at all confident that Solutions Barbados has realistic solutions to the tax revenue matter.

    Please note that I have stated my point politely and clearly. I have not affronted Solutions but put an alternate view.

    Awaiting Grenville’s reply.

    Like

  6. Artax July 30, 2017 at 8:15 AM #

    Since, according to Grenville Phillips II, Solutions Barbados candidates are “successful business men/women who have over 20 years experience” and has “published its fair tax policies over 2 years ago,” perhaps for purposes of good governance and transparency, these business men/women would care to present their financial statements for public scrutiny so as to verify they have not also exploited these “tax loop holes” as well.

    It would be interesting to know if for over twenty-years Grenville Phillips II and his businesses associates in SB have reaped the sweets he is now calling sour.

    Like

  7. Crusoe July 30, 2017 at 8:17 AM #

    David July 30, 2017 at 7:38 AM #
    There is no right or wrong approach to how a tax system should be designed. It is more a philosophical one

    I disagree. A tax system should be designed to be appropriate for the economy, to be effective, to be fair (a tenet of tax design). As such, there is a right way and a wrong way.

    Like

  8. Crusoe July 30, 2017 at 8:21 AM #

    Sunny Shine July 30, 2017 at 7:31 AM #
    Chad999999
    …. Who the shite benefits, besides the corporate, when he does not pay his taxes base on a the stupid system of taxing profits- a most amorphous concept? What Granville stated is perfectly correct, a certain degree of manipulation can easily affect profit margins to make it appear marginal or insignificant so as to reduce taxes or pay none at all

    Could be true if the methods are not correctly applied and audited. Not true at all if the methods are correctly audited (by the tax people). That is why there are rules on allowable expenses. If some slip through the rules, push the envelope so to speak, that is a matter of implementation and improper review, not the mechanism per se.

    Don’t throw the baby out with the bathwater. If there is an issue with review, fix it.

    Like

  9. Artax July 30, 2017 at 8:29 AM #

    “There are many personal use items that can be justified as necessary for a company to develop and sell company products. Such items may include: cars, cell phones, clothes, lunches, dinners, gym memberships, home help (eg. maids), home maintenance (eg. gardeners, painters), caterers, donations, overseas travel, taxis, overseas hotel costs, tools, furniture, appliances and utility bills.”

    @ Solutions Barbados

    From what source did you receive the above information?

    I have been providing tax services for several years and have not been as fortunate as you were to know owners of incorporated businesses claiming “personal items” such as those listed above, as expenses in the income statement section of the corporation tax return.

    A vehicle purchased for company purposes is described as a “tangible capital asset” and NOT an EXPENSE, and is recorded at cost in accordance with the “cost principle” (GAAP). However, the costs relative to maintaining the vehicle are recorded as expenses.

    As it relates to maids……….. if an INDIVIDUAL employs a maid, the employer’s National Insurance expense, which is the amount the employer pays on behalf of the employee, may be claimed as an expense on an individual income tax return and NOT a corporation tax return, unless that maid is employed by a company.

    Lunches, dinners, caterers, taxis, overseas travel and overseas hotel costs would be categorized under entertainment and travelling allowances respectively. According to the new tax laws, entertainment and travelling allowances are taxable.

    But then again……… who am I…… Grenville Phillips II may be correct……..

    ……….. I should not even be commenting on accounting issues……………after all, BU’s prominent contributors accused me of not knowing what I am doing.

    Like

  10. David July 30, 2017 at 9:02 AM #

    @Crusoe

    Believe it or not we are not far apart here. It is in the design of the tax system that philosophy comes into play.

    Like

  11. millertheanunnaki July 30, 2017 at 9:07 AM #

    “Solutions Barbados published its fair tax policies over 2 years ago and they have undergone over 2 years of rigorous public scrutiny. It is proven that when taxes are low, simple to calculate, easy to pay, and easy to check for compliance, governments normally receive more revenues. Therefore, corporate tax rates will be reduced to 10%, and applied to revenues with no deductions.”

    This man Phillips still can’t get it in his engineer’s head that what he is proposing is pure and simple a sales or consumption tax through which the same workers he is trying to shield in his imaginary way would be ‘indirectly’ affected just like the NSRL or any other tax in which any form imposed on businesses.

    Corporations/businesses do NOT pay (absorb) taxes but merely perform the role of tax collector on behalf of the government.

    All taxes (including that on profits via capital charge) are passed on in the final price for goods and services charged to consumers or withheld from dividend payouts to shareholders.

    We could concede that such a simplistic tax on corporate revenues would be more efficient in its application and collection efforts but it would result in the massive rewriting or elimination of the existing tax rules with concept of depreciation or Capital Cost Allowances thrown through the window with the tax accountant baby.

    What we would like to hear from Grenville Mark 2 is if he will adopt a similar approach to the International Business Corporation environment and just take a small percentage off their total revenues.

    Now that would remove in one fell swoop the entire fiscal burden and forex shortage currently plaguing parasitic Barbados.

    Like

  12. millertheanunnaki July 30, 2017 at 9:20 AM #

    @ Artax July 30, 2017 at 8:29 AM
    “As it relates to maids……….. if an INDIVIDUAL employs a maid, the employer’s National Insurance expense, which is the amount the employer pays on behalf of the employee, may be claimed as an expense on an individual income tax return and NOT a corporation tax return, unless that maid is employed by a company.”

    The tax guru is only going according to his own tax fiddling practices and experience.

    No wonder he is convinced the whole corporate tax regime based on profits before tax is just one con game played by financially-trained white collar criminals aka sophisticated muggers of the Treasury.

    Like

  13. Chad99999 July 30, 2017 at 9:22 AM #

    “There is no right or wrong approach to how a tax system should be designed”

    Wrong.

    In a Taxation 101 class, the professor will usually tell you the principles that must be taken into account in designing any tax system.

    Chief among them: The wherewithal-to-pay principle.

    Governments depend on (mostly) voluntary payment of taxes. If most people refused to pay, the government would not have the time or the money to chase down the rebels and compel payment.

    So the design of a tax system must be keyed to the ability to pay (and there are various ways to do that), otherwise the tax code would be too difficult to enforce.

    Granville’s tax proposal violates the wherewithal-to-pay principle and is what tax professionals would therefore say is a misconceived system.

    Case closed.

    Like

  14. David July 30, 2017 at 9:24 AM #

    We should keep in mind Grenville’s father is a senior Accountant.

    Like

  15. David July 30, 2017 at 9:26 AM #

    Have a read of this article Chad.

    http://www.shmoop.com/finance/taxes/adam-smith.html

    Like

  16. Bush Tea July 30, 2017 at 9:58 AM #

    @ Artax
    It may be better not to open that ‘can of worms’ containing discussions on AUDITING in Barbados.

    What a scam profession….!!!

    Wunna aint worth what Paddy shot at….
    All kinds of teefing and malfeasance going on, and wunna producing ‘clean’ audits every damn year – joining with the crooks to deceive the public and shareholders…

    Best to leave that one alone….

    Like

  17. Chad99999 July 30, 2017 at 10:01 AM #

    To be charitable, maybe Grenville didn’t consult his father on his tax plans. Or maybe Grenville’s father forgot what he learned, or should have learned, in Taxation 101.

    Like

  18. Bush Tea July 30, 2017 at 10:05 AM #

    Chad is wrong.

    Tax strategy CAN be designed to FORCE specific behaviours.
    It need not be conditioned on what the taxed can AFFORD to pay (given their present realities) but can be designed to ENFORCE new realities based on the tax penalties enforced.

    Since Government controls all of the power systems in a community, it is generally very easy for them to collect taxes – even those taxes that the public ‘cannot afford’.

    Look how many Bajans paid the Shiite Tax – mostly those who could least afford to do so…
    Charge two businessmen and 98% of the defaulters will hurry and pay up….

    Tom Adams routinely used Tax measures to ENFORCE behaviour – especially with respect to access to FOREX….

    Like

  19. millertheanunnaki July 30, 2017 at 10:17 AM #

    @ Bush Tea July 30, 2017 at 10:05 AM
    “Tom Adams routinely used Tax measures to ENFORCE behaviour – especially with respect to access to FOREX….”

    Good point there, Bushman!

    Why not require ‘anually clean’ tax clearance certificates in order to have access to scarce forex earned by other honest taxpayers?

    One is left to wonder what the lawyers and bankers would have to say about that.

    Like

  20. de pedantic Dribbler July 30, 2017 at 10:21 AM #

    Oh David, what a wondrous web you weave…

    I was confounded completely by your 6:31 re “Are the candidates not able to articulate in public fora on the issues?”…doesn’t articulation require solid data, facts and figures!!

    … and then your 7:38 literally had me gasping re “There is no right or wrong approach to how a tax system should be designed. It is more a philosophical one. ..”

    So when I got eventually to your 9:24 AM re “We should keep in mind Grenville’s father is a senior Accountant”, I literally got up to get a cup of tea…I was so giddy. …I jest here at the end with the giddy, but ONLY just…the Lipton’s did do the trick! LOL.

    But Chad45, I have to commend your practical provocation today…it is still a bit over-the-top but then Grenville’s proposals are bordering on asinine….so you are entitled to go over the edge.

    For the love of me I can’t figure out how the son of a seasoned accountant (thus my giddiness from David’s remark) could offer such a comprehensive overhaul of the nation’s tax system with such limited data.

    He shows absolutely no analysis of revenue projections (that I have seen on his site or otherwise) but continues to opine that his program has been rigorously analysed over these last two years. Balderdash.

    PeterLT and Artax have done solid analyses of his system and both showed a complete lack of viability…Grenville’s response to that rigor has been to label then trolls and NOT answer the real data fact queries.

    It is incomprehensible David to remove the current corporate tax structure, the VAT based system and other tax assessments (as Grenville has said) and replace it with a single 10% tax of corporate revenue…in A VACUUM OF NO DATA.

    That is not about the philosophy of taxation Mr Blogmaster but the practical aspects of tax revenue as a percentage of commerce…there is DEFINITELY a right and wrong. And failure would be catastrophic…even the attempt at change would be disastrous.

    I admire Mr Phillps as a person – he is basically a straight shooter – but we cannot accept this Trumpian ‘believe me’ folly simply because he is a good man and means well.

    Where are the stats to support his contentions…

    And @Artax, thank you senor. I am no tax accountant so I merely smiled at the ‘believe me’ assertions that corporate chieftains claim supposedly personal maid and other expenses on their corporate statements.

    That is illegal as far as I know, but be that as it may.

    Some appear to be saying that Grenville means well simply because he has highlighted the age old trickery of corporate tax evasion…..that he is a man of integrity and principle amidst a bunch of thieves and vagabonds so give him a blank slate to propose anything.

    Works for me. NOTTT!

    Like

  21. millertheanunnaki July 30, 2017 at 10:25 AM #

    @ millertheanunnaki July 30, 2017 at 10:17 AM
    “Why not require ‘anually clean’ tax clearance certificates in order to have access to scarce forex earned by other honest taxpayers?”

    Why not require, on an annual basis, tax clearance certificates in order to have access to scarce forex earned by other honest taxpayers?
    That should provide work for the accounting professionals which Grenville intends to decimate.

    Like

  22. David July 30, 2017 at 10:41 AM #

    @Dee Word

    You problem, and a few others on here, lack the ability to see grey and apply context. The tax policy we want to implement must dove tail the kind of Barbados we want. This is where is starts and begins.

    Here is an example you can understand -Republicans believe in lower taxes to benefit business and owners of capital this they argue will result is a bullish business climate, high employment etc, Democrats are inclined to fund more social programs. From the two, tax policy is shaped. What is the philosophy of Solutions Barbados compared to DLP and BLP. Is there positions we can differentiate? If not we an continue to debate tax reform in isolation.

    Like

  23. Chad99999 July 30, 2017 at 10:49 AM #

    Bush Tea

    Hal must have got to you.

    I am not wrong, and neither is the accounting profession. [Or at least, those members of the profession who are competent.]

    You cannot squeeze blood from a stone. If there is no money in the bank, you cannot pay taxes year after year. No matter how many policemen or prisons the government has.

    Get it? We are not discussing brain surgery.

    Like

  24. millertheanunnaki July 30, 2017 at 11:10 AM #

    @ Chad99999 July 30, 2017 at 10:49 AM
    “You cannot squeeze blood from a stone. If there is no money in the bank, you cannot pay taxes year after year. No matter how many policemen or prisons the government has.”

    And that Chad is the core of the of any tax system if it is to be effective. No cash in the bank or in hand means no money to pay taxes.

    And we all know where that cash comes from. Only from sales made to cash paying customers unless your banker is a fool to extend your overdraft with no hope of collecting monies from your credit customers.

    Like

  25. de pedantic Dribbler July 30, 2017 at 11:40 AM #

    @David …remember you went there first…LOL….I so refrained from making any Dem and Repub comparisons to avoid the rants from those who always see Bim as some alien island n its own solar system…but as you propelled the rocket….

    We can argue ad infinitum about supply side taxation policies and the Dems harsh heavy handed tax and spend policy. Philosophy apart, those are based on actual data. WHERE is Grenville’s revenue data, David????

    The only way to get to grey is to have some freaking black and white. Where is the hard black and white facts, Mr Blogmaster. Support Grenville all you want but please do not accuse me of lacking the ability to accept what ” kind of Barbados we want.”

    Everything must start with solid projections and analysis not vapid but popular talking points lacking details.

    Here is my alternative example that we can also understand.

    I don’t believe that there should be an issue of transgendered folks serving in the military. If an individual is discontented about their sexuality to that point of physical change I figure that the military is definitely not the place for them. That’s my philosophical stance….I have absolutely no problem with gays or lesbian in general.

    But lo and behold a Grenville type pronouncement is made…. So now 100% of these folks will be disallowed in the military… But then we come to realize that there are actually over 2,000 and some say as much as 15,000 already in the military.

    We also come to realize that there was years of debate and study on this matter before it was agreed to allow them to serve.

    Thus David what type of ‘system’ do we want?

    Based on my philosophy they should not be there…but must I not balance that with the hard data that apparently shows there are no mission problems, service readiness or other operational issues with these folks being in the military.

    I can accept much grey there BECAUSE of the data and I have to subvert my personal underpinnings.

    What is there in the ABSENCE of Grenville’s data to allow any practical approach?

    And BTW in another place and other time I read Grenville’s STRONG support of the Republican style of taxation.

    Clearly his intent here too is that of the supply-siders. We know his philosophy. We need his projections.

    Like

  26. David July 30, 2017 at 12:28 PM #

    Dr. Belle is on a tear. Imagine he is touting philosophy vs accounting / management approach. No vision and imagination is guiding the thinking of our nation. Sounds familiar chad99999?

    Like

  27. Artax July 30, 2017 at 1:26 PM #

    Solutions Barbados’s taxation policy is basically a renaming and reduction of VAT to 10%. But SB has not explained how the policy would be implemented.

    For clarity, supposed “Company A” recorded $50,000 in sales revenue as at July 31, 2017. Therefore, according to SB’s tax policy, the company has to pay $5,000 in taxes.

    How is “Company A” supposed to recorded the tax transaction?

    Would the 10% be applied to the sales invoice, as is done with VAT, which means the 10% is passed on to the customer (e.g. $50 +10% = $55)

    …………. or would businesses have to deduct 10% tax from sales ($50 – 10% = $45), meaning the item would sell for $45.

    …………… or would the item sell for $50 and the business incur the 10% tax, which means the item actually costs $55, but is being sold for $50.

    Let’s analyse the simple income statement below:

    Company A: Income Statement for the month ended June 30, 2017

    Operating Revenue

    Gross sales = $282,000
    LESS 10% ON SALES REVENUE = $28,200
    Net sales = ($282,000 – $28,200) = $253,800

    Less: Cost of goods sold = $149,000

    Gross margin = ($253,800 – $149,000) = $104,800
    Less operating expenses = $75,000

    Net income = ($104,800 – $75,000) = $29,100

    Like

  28. Bush Tea July 30, 2017 at 1:42 PM #

    @ Chad
    Don’t mix up your metaphors…

    We cannot get blood from a stone, …but you can convert a ‘champagne taste’ into a ‘mauby habit’ with taxes though…

    You can diminish the taste for BMWs and Mercs …and increase the appreciation of small electric or hybrid vehicles with a tax policy…

    Perhaps Grenville is way past your thinking here…
    You are not the only ‘bright-boy’ bout here…

    Liked by 1 person

  29. Chad99999 July 30, 2017 at 3:05 PM #

    Grenville is not way past my thinking here. He is totally out to lunch.

    I don’t have figures for Barbados because as far as I know, the data isn’t published.

    But in the United States the average pre-tax operating margin for businesses in all sectors of the economy is just over 10%. Many industries have much lower average operating operating margins. Food wholesaling and distribution, for example.

    So if you applied Grenville’s proposal in the United States, you would make millions of businesses unprofitable, unless they changed their business model. And not all businesses can get away with raising their prices.

    It would be an economic catastrophe.

    Like

  30. Sunshine Sunny Shine July 30, 2017 at 3:09 PM #

    Bright my ass Bush Tea

    Tax on profits have been reviewed and critically analyse on the basis that companies practice dishonesty in disclosing their real profit margins. It is the way of the business world and it is the position of that same world to exploit the loop holes in the system. I am part of a large publishing corporation, and fully understand the taxation system to which our corporation is subject to a specific tax classification base on the declaration of income earn. Those companies to which we do business also have to fill specific declaration tax forms which provides the governing authority with what payments where made to our corporate. When we are calculated on the basis of those earnings we are instantly place in specific tax bracket and the prescribe taxes are than calculated and sent to us. We are not taxed base on our profit margins, but we declare those profit margins so that the classification can be made in terms of the calculations done under deductive analysis.Sometimes we pay more, other times we pay less. Taxing on profits might the system used for donkey years around the world, but that does not necessarily negate an automatic right or that it is the best system to derive corporate taxes by.

    Like

  31. David July 30, 2017 at 3:17 PM #

    Some free advice for Grenville, topics like this one will not get you anywhere in the mind of the electorate.So far you have not been able to penetrate the national conversation. What is the plan Grenville?

    Like

  32. Chad99999 July 30, 2017 at 3:33 PM #

    Just to provide some context here, because David is always talking about constructing a tax system to give us the kind of Barbados we want:

    The true low-tax countries in the world are the backward, subsistence economies of Africa (plus Haiti in the Caribbean), and the oil rich Arab states like the Emirates.

    Most “middle-income” countries, and low-tax advanced countries like the United States, pay between 20 and 30% of their national income (GDP) in taxes.

    In the Caribbean, the percentage of GDP collected in taxes is estimated at 27% for Jamaica, 28% for Trinidad, and 32% for Guyana. Barbados is at the high end of the range at 33%, because we have the only social insurance scheme in the Commonwealth Caribbean.

    High-tax countries are found mostly in Europe. In Germany and Scandinavia, government takes between 40% and 50% of GDP in taxes. The UK is an exception at 34%, just like Barbados.

    They don’t call us Little England for nothing.

    Like

  33. David July 30, 2017 at 3:40 PM #

    @Chad999999

    For clarity is your analysis focused on personal direct?

    Like

  34. Chad99999 July 30, 2017 at 3:49 PM #

    David

    These figures describe the TOTAL of all taxes paid to all levels of government. Not just income taxes.

    Like

  35. Bernard Codrington. July 30, 2017 at 8:04 PM #

    Chad 99999 at 3:33PM

    Good work. The Barbados model requires that level of taxation 30 – 34 % of GDP. It is the distribution of the tax burden that is debatable: hence David’s concern about the philosophical moorings.

    Like

  36. nextparty246 July 31, 2017 at 1:10 PM #

    Dear All:

    It is regrettable that commenters choose to make premature conclusions rather than engage in a civil discussion. That is why this these “discussion forums” were designed in the first place.

    The main concern raised is reasonable. If actual (as opposed to inflated) expenses exceed revenues, how will the business pay the corporate tax. Allow me to respond with 3 examples. However, please bear in mind that the tax will be applied to future and not past or current earnings.

    If a business’s projected revenues are significantly higher than its projected actual expenses, then the business can pay the corporation tax from the projected pre-taxed profit. For example, if a company estimates that its revenues will be $100,000, and actual expenses will be $20,000, then the company projects making $80,000 in pre-tax profit ($100,000 – $20,000). The tax due is 10% of revenues, which is $10,000.

    The company can pay the $10,000 tax from the $80,000 pre-tax profit, resulting in an after-tax projected profit of $70,000.

    If a business’s revenues are projected to be slightly higher or lower than its projected actual expenses, then the company can add the tax to the cost of each product sold. For example, if an item costs $90 to make, and it sells for $100, then the pre-tax profit is $10. Since the tax is also $10, the company can internally treat the tax like a sales tax and add it to the cost of the product. Therefore, each product will cost $111.
    If a business’ profits are between these two examples, then the company can use a combination of each. It can pay part of the tax from the pre-tax profit, and add the remainder to the cost of the product.

    It should be noted that each business in a competitive market will price its products in order to be successful. However, we will not dictate how a company should pay their taxes.

    Best regards,
    Grenville

    Like

  37. nextparty246 July 31, 2017 at 1:29 PM #

    Hi David:

    We are sending flyers to every house in Barbados. If you are aware of a house that has not received one, then please let us know.

    Once flyers have been distributed in a constituency, the candidate visits communities and households and to date, the results have been most favourable. We are planning to hold frequent town hall meetings across Barbados shortly.

    You will likely never see a newspaper report of any of us canvassing or of our town hall meetings. We have already been informed that we are not newsworthy, and one noted that third parties should be starved of oxygen. However, it seems that we are the only third party to be so starved.

    A recent example, we had a press conference and declared over 24 candidates. All we got was a critical Editorial. The UPP showcased one additional candidate to reach 5, and they got 3 full colour pages. Yet, we will press on with the oxygen that is available to us.

    Best regards,
    Grenville

    Like

  38. David July 31, 2017 at 2:15 PM #

    @Grenville

    Wishing you and team all the best. Can empathize with your situation, when BU household tried to promote the blog via email blast to use an example the local players refused. The establishment will protect itself.

    Like

  39. millertheanunnaki July 31, 2017 at 7:06 PM #

    “If a business’s projected revenues are significantly higher than its projected actual expenses, then the business can pay the corporation tax from the projected pre-taxed profit. For example, if a company estimates that its revenues will be $100,000, and actual expenses will be $20,000, then the company projects making $80,000 in pre-tax profit ($100,000 – $20,000). The tax due is 10% of revenues, which is $10,000.
    The company can pay the $10,000 tax from the $80,000 pre-tax profit, resulting in an after-tax projected profit of $70,000.”

    @ Chad 9×5:

    Now what, my maverick but pragmatic friend, do you have to say about the above hypothetical example from a man operating an ideal store in his own conceived La La Land of real business?

    We can only expect his well managed company to be so cash rich with loads of retained earnings and cash sitting in the bank as to be so willing as to pay taxes up front on projected or imaginary net cash flows generated from sales not even his management accountant could envisage.

    Like

  40. Enuff July 31, 2017 at 7:22 PM #

    Government refuses to tax companies fairly because of campaign contributions? Wuh kinda reasoning this? Bossman stick to engineering! Your reasoning and contextualisation of public policy is too narrow and simple. The Dems did the same shiite and look where we end up. #notinbarbadosagain #bushiesueme

    Like

  41. Enuff July 31, 2017 at 7:29 PM #

    By the way, plenty businesses’ revenue is less than their expenses. Then they collect employees’ NIS, don’t pay it it to the NIS but claim to be succesful business persons.

    Like

  42. Bush Tea July 31, 2017 at 8:57 PM #

    @ Enuff
    By the way, plenty businesses’ revenue is less than their expenses.
    ++++++++++++++++++++++++++++++++++++++++++++++++++++++
    Skippa … those are not ‘businesse’ … those are rolling bankruptcies…

    The ONLY ‘businesses’ that can sustain ‘revenue less than expenses’ are those bankrolled by our treasury under Stinkliar… and once he breaks the NIS …that shiite will also end in bankruptcy.

    …you are too anxious to cuss SB…. 🙂
    Tek it easy boss.
    LOL
    ha ha ha

    Like

  43. Enuff August 1, 2017 at 4:45 AM #

    Bushie
    And aren’t there many rolling bankruptcies SB have categorised as inflating expenses? 🤣 I am not trying to get at SB, I just ain’t gind down the rabbit hole with you. Forward with yuh tax on revenue. I keep telling wunna, cut and paste without context is idiocy.

    Like

  44. NorthernObserver August 1, 2017 at 10:26 AM #

    I think to take a static view of relative tax revenues is misleading. Possibly we need to ask why corporate taxes have declined, because they have. Is it related to the ongoing purchase of Bajan businesses by firms domiciled elsewhere, or even the re-domiciling of Bajan firms to “avoid tax” and the proportion coming from IBC’s vs local. Or is it a re-engineering of expenses etc.

    At the end of the day ALL tax comes from people, whether corporate revenue or personal income, it comes from people. Corporations are just formal associations of people, and there is a saturation point.

    Like

  45. Hants August 1, 2017 at 10:33 AM #

    “We are sending flyers to every house in Barbados”

    Post one on BU fuh we overseas Bajans.

    Like

  46. NorthernObserver August 1, 2017 at 12:45 PM #

    Further, I still do not see a pro-forma budget and a projected cash flow, on SB website. I appreciate, given the lack of information on certain areas (NIS etc) it is merely a “guesstimate”, it would be valuable to see how ALL components of revenue and expenditure fit under SB proposals.

    Like

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