Prices on 70 Food Items ‘Set to Drop’ in July

Consumers in Saint Lucia can expect relief on their grocery bills next month as the government moves to eliminate Value Added Tax (VAT) on 70 essential food items. 

And Prime Minister Philip J. Pierre has made it clear that retailers will be monitored to ensure they pass on the savings to consumers.

Pierre first announced the measure during his April budget address, confirming that the final product list was being worked out with the Chamber of Commerce. While the complete list is still pending publication, the prime minister this week named several items that will soon be VAT-free, including salted butter, cheese, split peas, chickpeas, red kidney beans, mackerel and fresh produce like tomatoes, onions, garlic and cucumbers.

The change, which requires parliamentary approval, will shift both VAT-exempt and standard-rated groceries to a zero-rated classification, stripping away the current 12.5 per cent tax on these goods.

At a Cabinet briefing on Monday, Prime Minister Pierre assured that once the law passes, supermarkets will reflect the savings.

” ….Food items in this country, 70 of them, are going to be zero-rated,” Pierre said. “So there’s no VAT paid on 70 food items… The price of these items should go down by 12.5 per cent automatically,” he said.

Of the 70 items, 45 are currently subject to the standard 12.5 per cent VAT rate, while 25 are already VAT-exempt. The new policy will remove taxes across the board.

To ensure compliance, the government will monitor retailers to confirm that the tax cut translates to lower shelf prices.

“Even if the cost coming into Saint Lucia goes up, the supermarket should bring the price down by 12.5 per cent,” Pierre stressed. “The government will be setting up our own monitoring to ensure that the consumer benefits from these reductions.”

Commerce Minister Emma Hippolyte confirmed that her ministry worked alongside the Chamber of Commerce and local businesses to finalise the list, which is now with the Ministry of Finance for last-stage approval before July’s rollout.

The VAT cut follows another recent consumer-friendly move: the June 1 removal of a six per cent service charge on price-controlled food items, a pledge Hippolyte called “a promise kept”. 

“As a government, we cannot control the price as it lands at the port. But what we can do is to look at the VAT, the service charge – the areas government has control over – and that is what we’re addressing,” she said.

The decision comes as households grapple with soaring living expenses. Opposition voices, like United Workers Party (UWP) candidate Marcella Johnson, have called the situation “unbearable”, urging faster action to ease the strain of food, rent and healthcare costs. Johnson has proposed temporarily suspending all taxes on food imports by individuals.

Meanwhile, accountant Richard Peterkin pointed out that while overall inflation has dipped, thanks largely to stable oil prices recently, food prices remain stubbornly high.

“If you measured inflation by way of food alone, you’d find that it’s still high. So, the question for any government becomes ‘how can you deal with that’?” Peterkin said.

“It’s been an issue that, quite frankly, in any election, is one of the things people are going to be saying, ‘What are you going to do, to either contain or reduce the price of food’? And we don’t have a lot of options because we don’t grow enough food ourselves. We don’t buy enough food from the region, which might make it cheaper because there are no duties.”

With legislative formalities expected to wrap up by the end of this month, the Cabinet will determine how long the VAT exemption lasts, with Prime Minister Pierre floating an initial one-year trial.