by Linda Straker
- As much as EC$30 million will be lost because of cost-of-living relief measures
- Opposition Leader did not support resolution based on similar measure in 1996
- Government to clarify what goods will be directly affected
Prime Minister Dickon Mitchell has disclosed that an amendment to the Excise Tax Act will increase taxes on alcoholic and tobacco products. It is the first of several measures aimed at raising revenue for the Government that was lost because of relief measures announced in the 2023 budget presentation.
When he delivered the 2023 budget presentation, Prime Minister Mitchell announced that Government will lose as much as EC$30 million because of the cost-of-living relief measures offered to citizens.
“Given the significant potential loss of revenue by the fiscal measures implemented by this Government, this is just one of the many counteracting measures that the government has taken from our fiscal policy to address this,” Prime Minister Mitchell told the Lower House of Parliament as he presented the resolution to amend the Excise Tax Act.
“The motion in relation to the Excise Tax Act is being moved to support the Government’s indication as per the budget presentation, and the passing of the Appropriation Act for 2023 as it relates to alcohol and cigarettes, and to assist the Government in paying for the many fiscal measures that will be implemented in 2023 to address the cost-of-living issues that are faced by our citizens,” said Mitchell who is also the Minister for Finance.
Some of the areas where the Government will have reduced revenue, according to the Prime Minister, include reducing the petrol tax from EC$5.50 to EC$3.50; and removing cooking oil, kidney bean, split peas, adult diapers, baby diapers, toothpaste, toilet paper, bathing soap, condoms and sanitary pads from the VAT list.
The resolution is bringing an amendment to the First Schedule and the Second Schedule of the Excise Act that will go into effect as of 1 February 2023 and will affect both alcoholic and tobacco products.
“Those measures will naturally lead to a reduction in Government revenue, and to offset that reduction, the Government’s fiscal policy is to tax goods which are to some extent demerit goods, such as cigarettes, for example, and alcohol, and which themselves often lead to, if abused, significant medical challenges for our citizens,” said the Prime Minister as he justified the amendment.
He further said that when citizens abuse these goods, the State must find the necessary revenue to pay for citizens’ care. “The policy thinking behind these fiscal measures is, the Government should raise revenue by increasing the tax on them to help offset,” he told the House.
“This will also assist the State with raising the much-needed revenue to address the significant health challenges that we face as a nation arising from the abuse of alcohol which in many cases leads to significant renal failure, and the abuse of cigarettes which oftentimes leads to significant respiratory illnesses,” he continued.
Tobacco products will see the Excise Tax moving from 105% to 200%, while the excise tax on alcohol will move from $1.10 and $4.40 per litre to $1.50 and $5 per litre, respectively.
The amendment to the Excise Tax Act will increase both the wholesale and retail price of most alcohol products, including beer, wine, whisky, rum, brandy, vodka, gin, and liqueur, as well as all tobacco and tobacco substitutes products such as cigars, cheroots, and cigarettes.
Opposition Leader Dr Keith Mitchell did not support the resolution based on his experience enforcing a similar measure back in 1996. “I understand the objective of the Government. It’s an attempt to raise revenue based on the perception that there will be a drop in revenue from other areas,” said the former Finance Minister.
“The problem is whether, in fact, that objective will be met,” said Dr Mitchell, who reminded the House that his administration had enforced such a measure in the past, but it failed to have serious financial positive impacts.
He further called on Government to clarify what goods will be directly affected by the amendment to the Excise Act. “The motion speaks about alcohol and alcohol-related products, so I think the Government needs to make it very clear, because there are items that have serious alcohol content that may not necessarily be part of this, and it must be clarified,” he said.
“For example, you have bay rum, methylated spirits that is used for specific things, even the question of sanitisers, some of them are strong alcoholic content, ammonia for cleaning. I think the Government needs to clarify exactly what products, because when the public servants are implementing something, if they are not given clear demarcation lines… then they can act sometimes against what the Government’s intention should be,” he said.
All very clear thank you.
So wait I thought this was an NNP issue that NDC could have fixed??? So whats the issue now?
It seems Grenada continues to vote dumb and dumber.
Taking taxes from one hand and change it to another hand does increase revenue.
There is serious lack of investment in Grenada that will stimulate economy from which the government can generate revenue.