BRIDGETOWN, Barbados, Friday January 8, 2016 – Telecommunications company Digicel has announced that it will absorb the controversial increase in Value Added Tax (VAT) on mobile phone services that took effect this month.
The move that Digicel’s regional chief executive officer Paul Osborne assured was “long-term” comes as competitor Flow has advised its customers that it will be passing on the 4.5 per cent tax hike.
Osborne indicated at the press conference where he made the announcement yesterday that although the company could suffer more than BDS$1 million (US$500,000) in losses annually, it believes shielding its customers from the tax increase would allow it to attract more business to help compensate for the shortfall.
“We hope the people of Barbados respond positively to this new gesture that Digicel has made in absorbing this tax. We are hoping that the people of Barbados recognize, support our business and come out and help people move to the Digicel network,” he said.
Consumers have been reacting positively to the news.
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Government increased the VAT on cell phone service from the standard 17.5 per cent to 22 per cent, from January 1, with Minister of Finance Chris Sinckler saying the BDS$14 million (US$7 million) expected to be collected every year would go towards funding university scholarships.
Osborne suggested the relief being given by Digicel was a gift of sorts as the country begins celebrations to mark its 50th Anniversary of Independence on November 30.
“The people of Barbados deserve to start this historical year off on a celebratory note and, as such, Digicel is delighted to announce that we will not be passing the VAT increase of 4.5 per cent on mobile services to all of our prepaid plans, our postpaid smart plans and our business customers,” he said.
“Digicel absolutely applauds the government’s education initiatives and its objectives and we will continue to be in full compliance with all its tax regulations . . . While our customers will not be out of pocket, Digicel will continue to pay all its taxes over to government at the new increased rate.”
A Strictly WiFi 2016 campaign on social media had been launched last month, urging cell phone users to ditch their data plans and use WiFi only to protest the increased tax. It has provided a list of free WiFi hotspots around the island.
A statement published on the campaign’s Facebook page described the Digicel move as a step in the right direction but said the fight to have the tax scrapped would continue.
“We hope that our campaign will encourage another mobile provider to rethink its decision on passing on the increase to customers. We thank Digicel for taking its customers into consideration at a time when we are feeling the pinch of increased tax rates and taxing on the whole. But this does not mean we will turn a blind eye to any issues we encounter as consumers,” it said.
“Don’t forget this fight is not over; we still believe that government’s decision to increase the tax was a backward step.”