Shopping for some staple food items could soon become easier, as Government contemplates expanding the range of everyday items in the basket of goods, according Minister of Small Business, Entrepreneurship and Commerce Dwight Sutherland.
The ‘basket’ currently contains close to 200 items that are currently exempt from the 17.5 per cent Value Added Tax (VAT). Those items range from bread and pastries, biscuits, water to pastas, mackerel, tunas, sardines, produce, vegetables and some meats.
Though not providing details or saying whether items removed would be returned to the basket, Sutherland said, as he toured the Massy Stores supermarket in Warrens on Monday, that the basket of goods is to be expanded. He pointed out that it would have to first be discussed with key interest groups, including supermarket operators.
“That is something we would have discussed and I mentioned to [Massy Stores managing director] Randall Banfield, and his team that we would be coming back to him very soon,” said Sutherland. “That is a policy initiative that we would have to discuss as a Cabinet, based on my recommendation and the recommendation coming from the Department of Commerce and ConsumerAffairs. That will go to Cabinet shortly.
”The basket of goods was slashed in half from 409 items by the Democratic Labour Party administration in September 2015, after then Minister of Finance Chris Sinckler announced that several of the items were not meeting the intended purpose.
Another issue which caught the attention of the minister was the cost of goods. Sutherland told journalists he was not convinced that prices were coming down fast enough following the removal of the controversial National Social Responsibility Levy (NSRL) on July 1.
Since the removal of the tax, which was introduced in 2016 at two per cent and then hiked to 10 per cent a year later, consumers have been complaining that there has been some ease in prices but not fast enough.
That tax was applied to all imports and locally-manufactured goods for local consumption. It was not to be charged on the VAT-free basket of goods.
Following Monday’s tour of the Massy Stores mega-supermarket, Sutherland, who had called on consumers back in September to exercise some patience, said “The average food price, though they are not at the level we would have seen at July 1, 2017, they are still higher than pre-NSRL.”
He said the Department of Commerce and Consumer Affairs has been monitoring the price movements of the items that attracted the tax as well as the basket of goods, and he believed supermarkets could do better.
But Sutherland quickly pointed out that supermarkets and retailers had a different challenge on their hands – an increase in their import costs.
Since March, ocean freighter Seaboard Marine had increased the fuel charge from the major ports in the US to the Caribbean, which it passed on to customers.The increase was applicable to all tariff and service contracts, with a 20-foot container attracting an additional $200, 40-foot container increasing by $400 and a 45-foot container by $450.
Sutherland said he had asked supermarket operators to “reach out to those persons who are shipping to us and those persons who we buy from, to tell them that we are in this business as a team and we want you to hold some strain as well”.
“Having said that though, I still urge the supermarket owners to try their best to get to the pre-NSRL prices. It may be challenging but all of us have to bear some of the burden in terms of absorbing some of the costs,” said Sutherland, who also urged local suppliers to do what they could to provide more affordable items so that supermarkets could stock more locally-produced items.
“If they have a profit of $20 they can make a profit of $10 or $15, for example – absorb some of the cost. Each of us has to play our part in building out this economy,” he said.
Praising Massy for sourcing produce from 27 local suppliers, Sutherland said he believed a lot more of this can be done across the spectrum.
Banfield said he was aware there was “a lot of conversation” regarding NSRL and pricing in supermarkets. But he pointed out that the “big basket of goods” did not attract the tax in the first place.
“So removing it has had no impact on bringing down cost of those items and they are the everyday items… so there are many items that could not fall because they had no NSRL. So the produce, for example, have no NSRL,” he said.
Banfield said although Massy had been affected by the new Garbage and Sewage Contribution and Health Service Contribution taxes, his store will still try to find a way to bring down prices on items, including items that had no NSRL.
Pointing out that freight cost was “an issue” for retailers, Banfield said that part of the conversation regarding prices needed to also take place at the level of importer as Massy did not do all its importation.
“So how are our local producers managing their business to help us eliminate certain costs?” he queried.