No price increase on 'luxury' food items yet

BY CAMILLE HUNTE

camille.hunte@trinidadexpress.com

THERE have been no price increases on 'luxury' food items just yet, as the Supermarket Association says it has still not received a full list of the items that will fall into this category.

President of the Association Rajiv Diptee told the Sunday Express yesterday that an unofficial list has been circulating but, to date, the Association has received no official communication from Finance Minister Colm Imbert on the matter.

Imbert, in his 2021 budget presentation in October, had announced that adjustments would be made to the Value Added Tax (VAT) base to include foods considered to be luxury imported items.

VAT was previously removed from thousands of food items by the People's Partnership administration in 2012.

Imbert said the tax would be re-introduced to luxury food items as the Government seeks to rein in the food import bill which sees 'hundreds of millions of dollars' being exhausted in foreign exchange to import goods like apples, grapes, strawberries, lobster, escargot and champagne.

Trade Minister Paula Gopee- Scoon had also lamented that the country was spending more foreign exchange than it earns, with a significant portion of this being spent on the importation of goods like breakfast cereals, biscuits, breads and pastries.

These, she said, accounted for almost $1.2 billion.

Imbert said such luxury imported food items, which were previously not subject to VAT, would have the full 12.5 per cent VAT applied come January 1. He said a full list of the items would be published before the tax takes effect.

Diptee told the Sunday Express that with January 1 having come and gone, he is still unaware of what items are to be classified as 'luxury' and therefore be subject to the tax.

He said supermarkets are continuing to sell at their regular prices until further notice.

'There are no changes on the shelves of the prices,' he said.

'No significant impact on grocery bill' Diptee said when the tax does take effect, he does not expect it to have any significant impact on the grocery bill of the average citizen.

'From what was indicated in Parliament by the Minister of Finance, by his estimation, this thing will be dollars and cents.'

Imbert had said that the cost of a pound of grapes would increase by roughly 58 cents, while a pound of apples would see an increase of just about 43 cents.

'So it will be a very nominal increase and not a large percentage,' Diptee stated.

However, he said consumers ultimately have the power of choice and their demand will determine whether supermarkets continue to offer some of these luxury goods for sale.

'If consumers continue to buy it and are willing to pay for it at the prices that will be coming in, that will determine whether or not it will stay on the shelves,' said Diptee.

He said the demand for some of the named items has remained high.

'From what we are seeing right now, seasonally speaking, the appetite is there.'

But while both Imbert and Diptee anticipated a nominal increase in the prices of luxury items, the Central Bank has reported an increase in food inflation.

In its Monetary Policy Announcement last week, the Central Bank said food inflation jumped to 5.1 per cent in November, compared to 2.1 per cent in August.

It called the increase 'notable' and said it was possibly related to Covid-19 disruptions in supply from domestic and imported sources.

While food inflation was over five per cent, the Bank said overall headline inflation remained contained, measuring 0.9 per cent in the 12 months to November 2020.

NO OFFICIAL LIST YET: Rajiv Diptee