Government has backed away from cutting or removing any of the taxes on petrol products which many blame for high prices at the pump.
The alternative, Minister in the Ministry of Finance Ryan Straughn declared, would be a decline in the public services that have kept many proverbial heads above the water in the COVID-19 pandemic, and curtailed capital works projects including a massive road repair programme.
Straughn on Monday revealed that massive bills from the pandemic, the ashfall from the La Soufriere volcanic eruption and, most recently Hurricane Elsa, together with a $600 million falloff in revenue have left the economy in a “delicate” state.
Exacerbating the already bad situation are price increases on the world market for basic commodities, including petrol, which has climbed to $3.99 and $3.16 per litre for gasoline and diesel, respectively, at the pump.
The 2018 collapse of state-run Petroleum Company of Trinidad and Tobago Limited (Petrotrin) and Barbados’ non-participation in the 2005 Petrocaribe agreement with Venezuela also exposed the country to a tough international environment, he told Down to Brass Tacks on Voice of Barbados radio.
“These things have impacted the actual base cost of almost every single commodity that there is that we rely on in the country. So we are not operating in an environment where we are completely insulated. I am saying that Government has consistently been trying to determine how we can intervene and still maintain the public services that we are offering,” Straughn said.
“The circumstances of where the economy is at the moment are actually quite delicate and the extent to which we are able to appreciate that in the environment that we are operating in, not only domestically but internationally, is quite a hostile one.
“We have committed to ensuring that we are consistent with the policy of paying down the arrears, ensuring that Barbadians can still enjoy as much as possible the full suite of services that have been put under strain because of COVID-19 and we want to be able to continue to do that,” he added.
More than 2 300 people have joined an online petition in opposition to the three separate taxes on petroleum products.
The Alliance Owners of Public Transport (AOPT) and the Independent Seaport Taxi Union have also expressed their opposition to the surging prices, while the Bridgetown Port Taxi Coop has written to the Ministry of Energy on the matter.
But Straughn contended that the seemingly saturated tax structure is consistent with reforms that replace high income tax and road tax with taxes on transactions.
“The 40 cents per litre which is currently levied as part of the fuel tax is technically not really a gas price in the same way as paying for gas directly,” said Minister Straughn. “I accept that this is what people see at the pump, but it is important to understand that that specific fuel tax has meant that the compliance with respect to road tax has actually improved.
“What we are also seeing as a result of that is an improvement in the way the roads are maintained. Of course it has not been accelerated quickly enough to be able to fix every road in Barbados, but we are making progress with respect to the way that the Government can respond to the maintenance of the roads, because we have been able to ensure that the compliance with respect to road tax as being delivered through the fuel tax is there,” he added.
While accepting that hikes on key products like petrol could have a domino effect on prices, the Minister rubbished the notion that this would adversely affect the economy as a whole.
Straughn said: “For areas like transportation there is a real cost there, but remember we made adjustments on the other side with respect to the road taxes to be able to accommodate the fact that those costs are there and therefore there is not a 100 per cent pass through, simply because the prices happen to go up.
“I accept, though, that in the COVID environment they had to limit the capacity on public transportation in relation to the carrying capacity to be able to mitigate against the spread of COVID, and therefore there are instances where the cost may not significantly match the revenue that those entities may be getting, but it is not necessarily a direct transfer of cost simply because the price has gone up for certain parts of the economy.”
