Hundreds of supporters of the People's Partnership Government went into a frenzy when Prime Minister Kamla Persad-Bissessar announced yesterday that effective November 15, the 15 per cent Valued Added Tax (VAT) on food items will be removed. She made the announcement at the coalition's pre-budget rally, An Account to the Nation, just ahead of tomorrow's 2012/2013 Budget.
Persad-Bissessar said the VAT removal was a short-term measure while the Government continued to work to expand the food production industry. "Will that be of help to you? Removal of VAT on all food items?" she asked "We must do everything to make your life easier. In poor, rich little Trinidad and Tobago, our people must not suffer." Many supporters who were interviewed said it was the best news they had heard for the year.
The Prime Minister said in 2008 she contributed to a debate on a motion in the Parliament to reduce the high food prices but it never materialised under the former administration. Food prices for the period 2002 to 2007 had increased by 200 per cent, she said. After speaking for close to an hour, the PM said effective November 15, the VAT will be removed on food items. She said alcoholic beverages and luxury food items such as caviar would be excluded as they were not zero-rated goods under VAT rules.
She listed pigtail, canned beans like red beans, baked beans and black eye peas and local fruit juices as some of the items from which VAT would be removed. Currently, she said there were 59 food items which are zero-rated. VAT was introduced by the National Alliance for Reconstruction (NAR) in 1990 under then prime minister ANR Robinson. Persad-Bissessar said: "It weighs heavy on my heart when people go hungry and children are unable to attend school."
"The number of parents who bear the burden of not being able to provide for their children is too high. The price to be paid for doing nothing is also too high." Persad-Bissessar said the country needed to grow more food and already, with eight mega farms, the agricultural sector would get a boost. She said the removal of VAT on the food items will boost the local food industry and jobs will be created in the manufacturing sector.
The Prime Minister said even though the poverty rate had been reduced by four cent, she found it was still too high. She said a working committee comprising the Ministries of Finance, Food Production, Prices Council, the Supermarket Association of T&T, the T&T Manufacturers' Association, Food and Beverage Section, and other non-governmental organisations, will review the listing of food items attracting VAT and compile a list of all the recommended items which will be zero-rated.
"Further, the committee will engage in a comprehensive overview of food import duties and make recommendations with respect to some, in order to reduce food prices without harming local food production and with the added goal of increasing the local food production industry," she said.