by Linda Straker
- Relief measures will include VAT exemption on several food items and other necessities
- Exemption list aligned with Government’s policy to support healthy eating and lifestyles
- 100% concession to CET and VAT to support creative economy for 12 months
- Reduced VAT on electricity consumption, mobile and broadband data
Grenada’s Government has announced cost-of-living relief measures for citizens of over EC$30 million as part of its 2023 annual Estimates of Revenue and Expenditure. At the same time, Prime Minister Dickon Mitchell informed the nation of new revenue-earning measures to be implemented to make up for revenue shortfall.
“As a Government, we will do what is necessary as long as it is necessary to shield our citizens from the devastating impact of high prices, especially on food, fuel, and other necessities,” the Prime Minister told the Lower House of Representatives when he presented the budget statement on Monday, 5 December 2022.
The Prime Minister said that in 2023, the cost-of-living relief measures will include VAT exemption from February to December 2023, on several food items and other necessities. These items include soya chunks, veggie patties, olive oil, canola oil, coconut oil, soya bean oil, sunflower oil, red kidney beans, black-eyed peas, lentil peas, condoms, sanitary pads, hand sanitizers, adult diapers, baby diapers, and bathing soap.
“The exemption list is aligned to Government’s policy to support healthy eating and lifestyles,” said the Finance Minister as he made his maiden budget statement to members of the House of Representatives.
“We will grant 100% concession to both CET and VAT for selective production equipment to support the creative economy for 12 months starting 1 February 2023. These will include storage media and art supplies as well as audiovisual equipment and production equipment for content creators,” he said.
“We will further reduce the VAT rate on mobile and broadband data from 20% to 15% starting 1 February 2023. This is consistent with Government’s policy to build a digital economy. You cannot build a digital economy without internet and data,” said Prime Minister Mitchell.
Also, from 1 February 2023, Government will reduce the VAT on electricity consumption from 15% to 7.5% for all consumers, and will reinstate the policy of zero-rating VAT on electricity consumption up to 99 kilowatts hours for residential consumers. The former New National Party administration suspended that zero rating on VAT on electricity consumption in December 2021. With regards to electricity consumption, Government will also introduce an electricity subsidy of EC$10 per month for consumers consuming up to 99 kwh.
“To pay for the cost-of-living relief measures and transforming priorities we will implement the following. Effective 1 February 2023, increase on the excise tax on alcohol from EC$1.10 and EC$4.40 per litre to EC$1.50 and EC$5.50 per litre, and the excise tax on cigarettes from 100% to 200%,” the Prime Minister announced.
Other new revenue-earning measures will include reintroducing effective 18 January 2023 the petrol tax at a rate of EC$3.50 per gallon instead of EC$5.50 per gallon on duty-paid sales; Increasing VAT on carbonated beverages and other drinks with high sugar content from 15% to 20%; Reinstating the environmental levy of EC$5 and EC$10, and, as of 1 February, apply an environmental levy on water usage. Consumers using between 2,800 and 5,500 gallons will be paying EC$5, and for over 5,500 gallons, the levy will be EC$10.
The 2023 estimates of Revenue and Expenditure to service the state is EC$1,350,465,246 with Recurrent Revenue anticipated to surge to $1,050.8 million.
The 2023 Budget was prepared within a medium-term framework that is in keeping with the requirements of the Fiscal Responsibility legislation, in which adherence to the fiscal rules will return in 2023, after three years of Parliament-approved suspension.
“The priorities for the 2023 Budget are based on Government’s strategic transformational policy agenda that is people-centred, and lays the foundation for resilience, empowerment, and growth that is set out in its Medium-Term Action Plan for the period 2023-2025,” said the Budget document.