As of the beginning of this week, residents of St Vincent and the Grenadines saw a reduction in fuel prices when the excise tax on fuel was reduced by 50 per cent.
Addressing a recent press briefing, Finance Minister Camillo Gonsalves announced that the government will also waive the customs service charge on all fuel bought by VINLEC, the state-owned and sole commercial generator of electricity. This, he said, would result in a reduction in the fuel surcharge that is passed on to the customers.
Gonsalves disclosed that this measure will be reviewed after three months, during which time the government is expected to lose EC$500,000. When the revenue that is lost at the pump is factored in, the government is expected to lose about EC$934,000 monthly or just under EC$3 million during the three-month period.
The finance minister explained that taxes account for about 18.75 per cent of gas prices at the pump, advising that the average cost of diesel at the pump in the Eastern Caribbean Currency Union (ECCU) was EC$15.76 a gallon. Gasoline prices average EC$14.83 in the ECCU, whereas in Barbados, which is outside the currency union, consumers pay EC$21.10 a gallon.
Gonsalves argued that St Vincent and the Grenadines has the lowest gasoline price in the Eastern Caribbean of EC$14.69 and the diesel price of EC$13.20 was only lower in Anguilla.
“So, already as prices increase, we have the cheapest gas and among the cheapest diesel, not because we subsidise it but because those countries put more tax on it,” the finance minister said.