BRIDGETOWN, Barbados--Barbadians will continue paying a lower value-added tax (VAT) rate on electricity until the end of September.
However, no decision has been made on a new compact with the private sector which would provide further relief for consumers.
Minister in the Ministry of Finance and Economic Affairs Ryan Straughn announced in Parliament on Tuesday that as was the case from August 1, 2022, to January 31, 2023, Barbados Light and Power Company’s domestic customers will pay 7.5% VAT on the first 250 kilowatt-hours (kWh) rather than the usual 17.5% rate for another eight months.
“Whilst we have seen some moderation with respect to oil prices internationally, we are very clear and conscious [of – Ed.] certain elements of the economy [that] still need to be protected at this time,” Straughn said during debate on the Value Added Tax (Amendment) Bill, 2023, in the House of Assembly.
“We have seen some settlement with respect to what is happening globally … Things are trending in the direction that we would like to see it in, generally speaking, but we believe that we are in the position to be able to continue this particular relief measure.”
Under the measure announced by Straughn during a Ministerial Statement on Energy and the Cost of Living on July 19, 2022, the standard VAT rate only applies to the portion of an electricity bill in excess of 250kWh.
At the same time, Straughn said on Tuesday, the administration was still making efforts to reduce the cost of living for Barbadians in other ways.
“The government continues to work with the private sector to determine the completion of the other element in relation to the compact as it relates to prices, and how it will evolve over time,” he said.
From the end of July last year to January 31, 2023, under an agreement with the government, the private sector capped markups on 45 food and household items. However, with some businesses expressing concern about losses during that period, discussions on a new compact are still underway.
During the debate, Straughn also revealed that the cap on VAT on fuel prices will soon be reviewed by the Ministry of Energy.
On March 16, 2022, that tax was capped at BDS 47 cents (US $0.235) per litre on gasoline and BDS 37 cents (US $0.185) per litre on diesel fuel, initially for six months. The provision was subsequently extended to January 31, this year.
The cap had been put in place as part of the government’s response to rising oil prices on the international market.
“During the course of the year, those fuel prices came down such that they rendered the cap ineffective, because the prices did not reach the threshold to be able to trigger the cap,” Straughn said.
“… We are in February; the prices are below the cap and, therefore, the Ministry of Energy will advise whether or not that is something that needs also to be continued given the trajectory for oil prices in the future.” ~ Barbados TODAY ~