Letter of the Day | Walk the talk, Mr Byles; cater to SMEs
THE EDITOR, Sir:
Richard Byles proposed recently that the way to reduce the high interest rates (15-18 per cent) charged by banks that make access to credit so hard for medium and small businesses is for Government to lower the taxes imposed on banks. He puts this at 48 per cent, the highest on any category of corporations. The multibillion-dollar profits that banks report disguise the low return on equity they actually suffer, says Byles.
But how about the banks starting the process by reducing the interest rates they charge? This would bring them a flood of small and medium-size business customers and improve their margin of profit, as well as their return on equity.
Mr Byles is not lacking in initiative. He is already a trendsetter in other areas. Here's his chance to do it again and compete even more strongly with the big two (NCB and Scotia) than he is already doing brilliantly through Sagicor. Certainly, it would be a breakthrough for small and medium-size businesses and good for Jamaica, which is his deep desire.
Let's face it, though, heretical as this will sound to Byles and the financial experts: Could it be that return on equity should not be a criterion for setting tax level? When so many others are barely hanging on to life under austerity measures, multibillion-dollar profit-making banks really have little ground from which to complain about high taxes. Certainly, they can expect no sympathy from the wider public.