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Consumption Tax to be Reduced on a Number of Retail Items

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Wednesday, April 26, 2006 – Government has proposed to reduce the rate of Consumption Tax on a list of supermarket items, in order to deal with the rise in retail prices on the island.

Prime Minister and Minister for Finance Honourable Dr. Kenny Anthony who delivered a 1.1 billion dollar budget on Tuesday said chicken and turkey parts, which at present do not carry an import duty, will have their 5% consumption tax reduced to zero. Evaporated milk which has a 10% consumption tax will be reduced to five Percent, while powdered milk which carries a 10% consumption tax will be reduced to zero.

“The import duty for Red kidney beans is 40%, its consumption tax is 5%, I will reduce it to 0%. Disposable baby diapers has a consumption tax of 30%, I will reduce it to 5%. Canned tuna fish has an import duty of 5% and a 10% consumption tax, I will reduce it to 5%. Canned mackerel has an import duty of 5% and a consumption tax of 15%, I will reduce it to 10%. Canned sausages which has a import duty of 30% and consumption tax of 20% will be reduced to10%,” Dr. Anthony said.

Dr. Anthony said, contrary to what many St. Lucians may believe, price controls do not prevent increases in the retail prices of commodities. Dr. Anthony said while government wish not to down play the challenges, the continued rise in the cost of living is one issue that all governments in the region are presently grappling with.

“Price Controls normally limit the profit mark-ups that a retailer is allowed to enjoy. Thus, if the importer is compelled to pay more for the items from abroad, for example, because the cost of fuel has increased, then the price of the items will still show increases on the shelves, even though the profit margin is controlled,” the Prime Minister said.

Imported food is subject to three taxes, namely Import Duty, Consumption Tax and Service Charge. The rates of Duty for all imported goods into Saint Lucia are CARICOM-determined rates. The Environmental Levy on the other hand does not apply to food items.

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