Phew..!

Barbadians should start to feel some ease from spiralling food prices and electricity costs as early as next week when a slash in the Value Added Tax (VAT) on certain items is expected to take effect.

Acknowledging the daily pressures experienced by Barbadians in coping with high prices of essential foods, electricity and gas, Prime Minister Mia Mottley on Thursday announced an $18 million package  to bring much-needed ease.

The relief measures saw an additional 44 food and household items included on a VAT-free list. In some cases, customs duties were removed from certain items paving the way for reduced prices to consumers starting from next Thursday, and ending January 31 next year.

In a near hour-long address to the country, Prime Minister Mottley said Minister in the Ministry of Finance Ryan Straughn will deliver a ministerial statement in the House of Assembly next Tuesday morning to ensure that those things which require legislative amendments would benefit along with the provisional collection of taxes that apply.

In addition to the supermarket ease, parents of school-age children would not have to worry about finding lunch for their wards during the summer holidays. Mottley said the School Meals Department will continue to provide lunches from July 25 to September 2 this year.

“We believe that this is a critical component in ensuring that our school children can have nutritious meals, while at the same time relieving the burden from off of the families from being able to move in a position where they do not have to buy additional groceries to ensure that their children can be fed during this period of time,” the Prime Minister stated.

“The Ministry of Finance will also offer relief for householders’ electricity bills by ensuring we reduce the Value Added Tax from 17.5 per cent to 7.5 per cent for the electricity charge up to the first 250 kilowatt hours of everyone’s residential electricity bill,” she announced.

Mottley said this will represent an average saving for every household of $17 whether or not they use 250 kw/h. “This is critical and it may not be a lot, but when you see it in conjunction with the other things we are doing, then you will understand the wisdom of the old Barbadian saying that ‘one, one blow does kill old cow,’” she advised.

Mottley cited data from the Barbados Light and Power Company which reveals that 63 per cent of all households in Barbados use 250 kilowatts of electricity or less.

“That therefore will mean for them, their bill will move from $204.46 down to $187.06. This, my friend will cost the Government of Barbados $1.527 million a month and therefore overall, will come to just to $10.5 million, running from August 1 to January 31,” she pointed out.

“The Ministry of Finance, through the Customs and Excise Department will expand a list of essential food items…on which no VAT will be charged and a few on which no duties will be charged,” the PM told the nation.

The new VAT-free items are hot chocolate, corn flakes, cream of wheat, sliced ham, black tea, honey, peanut butter, pears  and apples.    

   “We are going further, however, for there is no VAT on citrus and we are now seeking to remove the duties on citrus conscious that this effort will help Barbadians build their immune system and continue to help us in the fight against COVID which regrettably is still very much with us even though thankfully for the most part not as a major threatening disease to the majority of Barbadians,” Mottley contended.     

  She said Minister Straughn will therefore speak to the removal of duties on oranges, grapefruits, lemons and limes to ensure the boosting of all Barbadians’ immune systems.

“We have also concluded a compact…that will be signed on Saturday morning with the private sector that will lead to the reduction of prices on 44 key items for a period of six months from the 21st of July of this year to January 31, 2023,” Mottley disclosed.

The Prime Minister said supermarkets, wholesalers, distributors and farmers have agreed to review their markups and for the 44 items, have embraced, for the most part, with the exception of two or three, to have markups range between 12 and 15 per cent

This, she explained, would ensure that all Barbadian households, particularly the vulnerable, could benefit from a drop in price.                   

Mottley cautioned the country that while the expanded basket of goods will not include any “fancy” items such as mixed nuts, certain cheeses or meat cuts, it is a sufficiently large range of items that any family can live and live well.

Noting that the new prices of these items will be made available when the compact is signed on Saturday, the Prime Minister gave a peek into the cost savings.

“For example, Amir’s chicken, Halal chicken chop mix will go from $19.99 per kilogram to $15.29 per kilogram, a saving of $4.70 or 24 per cent. Chickmont’s whole chicken will go from $14.05 per kilogram to $11.58 per kilogram- $4.70 savings, a 24 per cent reduction,” the PM announced

Mottley said that would mean that a whole chicken which is typically one and a half kilograms would go from about $21 down to just over $17.

“Amir’s chicken backs will go from $7.29 per kilogram to $5.59 per kilogram, a saving of $1.70 or 23 per cent. Similarly, fresh chicken stew jumbo per kilogram will go from $15.79 to $12.09, a savings of 23 per cent,” the PM told the nation.

The price of pork stew with the bone in will decrease from $24.75 per kilogram to $19.05, a savings of $5.70.  The hind leg pork chops will drop from $24.75 per kilogram to $19.05, a savings of $5.70 as well. Fresh pork hocks will now be $13.50 a kilogram down from $14.99 per kilogram.

A dozen Tropical fresh eggs will now cost consumers $8.15, a decline of $1.94 or 19 per cent drop, while imported small Gala apples will cost householders 65 cents each, down from 80 cents

The Prime Minister said these types of apples are expected to be reduced in cost even further when the VAT is removed.

Florida oranges will also move from $1.80 per fruit to $1.15 each.

“Why? Because we are serious about Barbadians being able to build up their immune system against the dreaded COVID 19,” the PM said.

In addition, price reductions will be coming for parboiled rice, roll-on deodorant, Bumble Bee tuna, Sun Gold evaporated milk and Pine Hill Dairy two per cent milk.

“Let me pause and say here, that we are going to have to address the difficulties with the price of milk in this country. It is not an easy solution. The last government brought a cess which was announced by a previous minister of finance, but it was never implemented. “        

“The state of the dairy industry is going to require serious discussions and I cannot make promises that there would not have to be some impact on milk prices at some point in the future in this country. But we are going to hold over the course of these six months,” Mottley assured.

Eclipse and soda biscuits will also see price changes along with Purity old time salt bread and Crumbs salt bread in addition to whole wheat sliced bread and white sliced bread.

“Those goods that I just announced there, that would normally cost at the current price, $294.38, will now be reduced to $251.80, a saving on this basket that I have announced of $42.58,” Mottley said.

While praising the Social Partnership for working with the Government to bring the country to this place, the Prime Minister suggested that going the route of price controls, would have led to “scarcity and adversity” and “corruption”.

Mottley also assured Barbadians that the local manufacturers of animal feed have committed not to increase their product for another six months unless there is some extraordinary event way beyond everyone’s control.

She also said that the Ministry of Commerce has been reminded of its commitment to continue to monitor prices twice a month to ensure the promises of the government are real.

“We had rough and frank discussions, but the sense of patriotism to this country by all at the table was such that we recognised that we need to put the best foot forward in ensuring we have these things…”

“And since a brand and a reputation is only as good as it is credible, the robust programme of monitoring and publishing of prices, not only to the public but now to the Cabinet every two weeks, will ensure that Barbadians will get the best prices where they can,” Mottley pointed out. She said there is a distinct possibility that some of the wholesalers like Roberts Manufacturing may be prepared also to wholesale margarine and oil given the fact that government was trying to create opportunities for people.

Mottley said fish, the prices of which have been high in recent times, was not included in the basket because discussions are continuing to settle on the best way to address the skyrocketing costs to consumers. The Prime Minister said the vegetable situation is being tackled separately as Minister of Agriculture Indar Weir continues his talks with Guyana to conclude a plan for that sector.

The Prime Minister also addressed the import duty on hybrid vehicles saying, “The import duty on plug-ins will go to 25 per cent and for regular will go to 35 per cent. Both of these are down from 45 per cent and this will be effective from August 1, 2022.”

The cost to government of the VAT ease on electricity will be $10.5 million and the cost of the summer feeding programme will be $2.5 million while the reduction of VAT and duties is likely to be about $5 million. She said she will be asking labour to exercise flexibility when government meets with unions in a couple of weeks time.

emmanueljoseph@barbadostoday.bb