Minister: Don’t blame VAT for price increases

ROSEAU, Dominica, June 27, 2007 – Dominicans are grappling with an increase in the cost of food and other goods which increased soon after the introduction of the Value Added Tax (VAT) but a government minister said the tax is not responsible.

Minister for Economic Development and Planning, Julius Timothy, said that factors beyond government’s control are responsible.

“A lot of people are blaming the increase in the cost of living on the VAT. But that is not true. The increase in prices has been as a result of imported inflation primarily due to the increase in oil prices and that is the reality,” Timothy said at a Town Hall Meeting in the village of Paix Bouche recently.

The 15 per cent VAT was introduced on March 1, 2006.

“When there is a rise in the cost of fuel everything else goes up. It goes up slowly, but it all goes up in line with the cost of fuel. It just happens, in fact, it is coincidental that the VAT has come in at the same time that we have seen the increase in the price of oil.  As a result we are looking for something to blame for the high cost of the goods in the shops, so we say it is the VAT,” said Timothy.

To further argue his case Timothy gave an example of wholesaler Hara Agencies Limited which published a list of items and prices before and after the introduction of the VAT. The list showed reductions in the prices of many goods after the VAT was introduced.

“The only thing that VAT has increased is the cost of services,” he admitted.

The price of oil has risen sharply in the last few years. The price of standard crude oil increased from less than US$25 a barrel in September 2003 to over $70 a barrel today.