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Measures to tackle cost of living


Kendy

Measures to tackle cost of living
Prime Minister Mia Amor Mottley. (GP)

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Government is moving to shield Barbadians from high prices.

Delivering the 2022 Financial Statement and Budgetary Proposals in the refurbished House of Assembly in the East Wing of the Parliament Buildings today, Prime Minister Mia Amor Mottley announced measures that should ease the pockets of citizens as global oil, shipping and food prices continue to increase.

Among the measures being implemented are the capping of fuel prices at the pump from midnight Wednesday and temporarily capping freight costs, which should see a reduction in the cost of some food items and consumer goods.

Mottley said her administration understands “the strain Barbadians are facing with higher costs of living”.

We see it, we feel it, and we hear them. Both oil and freight increases are particularly impactful on our consumers because they cannot switch to alternatives overnight”.

Furthermore, with the ongoing war between Russia and the Ukraine threatening to lead to “serious tribulations” in oil and global food prices, food supplies and financing which will have “a profound effect” on Barbadians and the cost of living, the Mottley said Government is committed to doing what is possible for “a nation such as ours”.

She said Govt will “extend the Barbadian shield in a “very carefully targeted way”.

Mottley said that “Government currently needs all the tax revenues it can collect” and “must do so to get back to where we were before COVID”, however, she noted that it does “not need to collect even more revenues from the consumption of oil and freight” before announcing adjustments on value added tax (VAT) at the pump.

“We propose to cap the dollar amount of VAT payable on petrol to 47 cents per litre from the 61 cents and we shall do so effective midnight, Wednesday March 16, initially for six months. I give the House the assurance that at the end of the six months we may well have to look and see what further adjustments have to be made but, in this environment, we have to walk sure footed.

“This means Mr Speaker, once adjusted from midnight Wednesday, Barbadians will see the price of oil at the pump go from $4.13 to $3.99 immediately . . . Similarly, in the case of diesel, we will cap the dollar amount of value added tax payable to 37 cents per litre effective midnight the same Wednesday, March 16 initially for six months.

“This means that the current international prices should bring down the price of a litre of diesel from $3.46 to $3.32 per litre. The Government is effectively transferring 14 cents per litre of gas in VAT revenue and 14 cents per litre of diesel of VAT revenue to the consumers delivering a collective saving to consumers but at the same time costing the government of Barbados $25.2 million in lost revenue.

“This is a lot of money and therefore you would appreciate this is a sacrifice that we have to make for our people. If the war lasts longer or becomes more disruptive and oil prices rise, this transfer of VAT foregone by the Government for the benefit of consumers will equally grow but that which we do not receive we do not miss,” said the Prime Minister.

Mottley, who noted that Barbados “imports nearly everything it consumes, regrettably”, announced that “effective midnight tonight the Government of Barbados will partially shield consumers from the increase freight costs by capping the costs of freight used for the purpose of calculating customs duties at the pre COVID-19 levels of US $7 350 per 20-foot container and US $8 000 for 40-foot containers” for 12 months.

“This means that the Government will forego revenue with respect to the escalation of shipping prices for the next 12 months until March 31, 2023.

It is difficult for us to calculate what the amount will be largely because of the fluidity of imports into the system into the country. These two measures will bring partial, but we believe significant relief, to all Barbadian consumers. This is part of the Barbadian shield,” stated Mottley. (GBM)