The Keith Mitchell-led government in St. George’s has passed legislation in Parliament to impose a 10% tax increase on alcohol and cigarettes as the ruling New National Party (NNP) regime continue with its sweeping austerity tax measures as part of a Structural Adjustment Programme (SAP).
Faced with a difficult fiscal situation including default on Grenada’s national debt of EC$2.4 billion, the government in St. George’s has been forced to increase taxes to raise revenue in an attempt to close the gap between revenue collection and expenditure.
The elected House of Representatives met on Tuesday to amend the Excise Tax Order (No. 2), 2014, that will now affect the prices of Beers, Stout, Wines, Spirits, Brandy, Rum,
The amendment was ratified three days later on Friday when the Senate met to ensure passage of the legislation.
Under the changes made, Cigarettes or High End Tobacco that attracted Excise Tax of 95%, increased to 105%; and reconstituted tobacco moved from 25% to 35%.
The amendment was piloted through the Lower House by Leader of Government Business, Works Minister Gregory Bowen, the elected Member of Parliament for the St. George South-east constituency.
Minister Bowen noted that the 15-month old NNP Government had embarked upon the difficult task of closing the fiscal gap and had brought it down from $18 million to $10 million since it won the general elections in February 2013.
In addition, he said that due to certain measures put in place by the Mitchell-led government, the new leaders have been able to see increases in revenue collection from $35 to close to $45 million a month while reducing expenditure by 3 million dollars from $53 to $50 million.
Stating that the $10 million fiscal gap is still a wide margin, Minister Bowen said that the new government cannot continue to do what the former Congress administration of Tillman Thomas did by selling valuable capital assets to meet recurring expenditure.
The senior government minister said that the 10% increase in taxes on alcohol and cigarettes is aimed at closing the fiscal gap and at the same time curb certain illegal and immoral activities in the country.
According to Minister Bowen, if the Mitchell government manages to “reach the level where our income exceeds our expenditure, we would remove these taxes”.
“We are doing this for the benefit of the country and if per chance Mr. Speaker, we do reach the stage where income exceeds expenditure then we’ll be the first and happiest to remove those taxes that are burdensome for our nation,” he added.
Backbencher, Tobias Clement, the Parliamentary Representative for St George North-East also spoke in support of the amended Bill to increase the costs to consumers of alcoholic beverages and cigarettes.
Clement told Parliament what is important right now is putting the country’s fiscal problems in order and building a nation and a people to appreciate a mentality of taxes.
The MP also accused members of the Congress party of encouraging Grenadians not to “The naysayers, going out there and advising the people they shouldn’t pay”, Clement said, adding that what the opposition is doing could amount to an act of treason against
He stated that the administration was trying to rectify a problem with the island’s fiscal situation but “there are those out there who are telling people they should not (pay taxes), it means therefore that they want the country to fail….”.
“….They (are) looking at it as a NNP Government or NNP thing, but this is Grenada and we are all in this thing together”, he said.
Clement was obviously referring to a series of islandwide forums held by Congress in which the party got a number of local lawyers to raise concerns about the doubling of the Property Tax.
The lawyers have been questioning the legality of the legislation and urging home owners to pay taxes based on the 2013 rate and not on the 2014 increases on the grounds that the purported increase is not in keeping with the laws of the land.