By John Denny
(Charlestown, Nevis) – The Nevis Island Administration is delaying implementation of the consumption tax cut it announced in April. The reason for the delay is the lack of a mechanism for enforcing price reductions by grocers, according to Junior Minister Dwight Cozier. A Consumer Affairs Department is being created to implement the tax cuts, but there have been physical and logistical problems that have delayed the realization of this new department.
“The Consumer Affairs Department is not fully constituted yet,” said Minister Cozier. “We have some physical problems. The area at the Pinney’s Department of Trade that is slated to hold Consumer Affairs is not yet prepared. We have some construction to do, but we have hired a staff.”
Unfortunately, the person hired as the Director has taken ill and is in the U.S. receiving medical treatment, the Minister said.
“Rest assured, we will continue with this initiative,” said Minister Cozier. “The Nevisian people will benefit from the reduction of tax on the goods we specified.”
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At a press briefing in Charlestown, on April 29, Minister Cozier said that the Administration was committed to the formulation of policy to ensure that the cost of living was kept to a minimum.
“With this in mind, the government has decided to take steps which will lead to a reduction of the cost of imported foods and some none food items designed to counter the global crisis. The government has decided to cut consumption taxes on a number of items by a rate of at least 10 percent. Additionally, the NIA has decided to compute the consumption taxes on Cost, Insurance and Freight (CIF) only. The NIA believes that a reduction in consumption tax would reduce the cost of specified items to the consumer.
“It is important to note that the formula for the computing of consumption tax is cost insurance and freight plus import duties, times the relative percentage of consumption taxes. Consumption tax is therefore varied between 7.5 percent and 22.5 percent depending on the particular item. The government has decided to approve food items identified by the study of food consumption patterns, which was undertaken in 2007 and which captured a wide cross section of food consumption patterns in Nevis,” he said.
The Minister listed the items and explained that a section of the study identified four basic groups of food items consumed by the people of Nevis on a daily basis, which was used as a guide.
Rice, all flour, Cream of Wheat, Sardines and Tuna was approved at 100 percent reduction in consumption taxes and so to are baby pampers and adult diapers while cheese, white potatoes, oats, butter, Vienna sausages, dried peas, carrots, bananas, orange juice and apples would receive a 10 percent reduction on the current rate of consumption tax.
According to Mr. Cozier, the reduction in consumption taxes coupled with the charge of consumption taxes on the CIF alone on the group of selected items, would reflect a significant reduction in the local prices of those products, when it is implemented.
He said the Administration was in the process of taking two strategies to ensure that the reductions were passed on to the consumer. It involved direct consultation with all the merchants and retailers of food on Nevis, to inform them of the decisions taken by the Administration and to make them understand how it was intended to carry the cost reductions into the market.
The second approach would involve policing the prices on these specified products by officers of the soon to be Consumer Affairs Department at the Ministry of Trade.
The Minister said although there were no punitive measures in place to ensure that the reductions were enforced, there was need for collaboration with the merchants and retailers of food on Nevis. He noted that there was no room for non cooperation in the Nevis community.
“We have no penalties in mind as yet and we are not thinking of it as a punitive thing. We are thinking more in the context of cooperation and we believe that our consultation that we are about to have with the merchants, retailers and other business people on the island of Nevis will alleviate the need for such things as non corporation and penalties. We really go the approach first and foremost from the standpoint of the Consumer Affairs Department of cooperation.
“We believe in a community like ours that cooperation goes a long way. I have already spoken to a number of the merchants and retailers informally and they have given their undertaking that this is something that they will respond to positively,” he said.
Mr. Cozier explained that he had planned to follow up the informal meetings by meeting with the merchants so that they could further consult on the matter.