Shoppers hoping for savings after the Saint Lucian government removed VAT on 70 food items by August 2 will be met with a mixed picture: a few price drops, small changes, and in some cases, no movement at all.
At a Castries supermarket, cucumbers sold for $3.46 a kilogramme on July 30. By August 11, they still did. The same was true for yellow onions, carrots, watermelon, tinned tuna (200g or less) and coconut oil (in bottles 750ml or less). Some pantry staples saw modest declines – Swiss tomato ketchup slipped from $6.99 to $6.21, and Peak chickpeas from $5.21 to $4.63. Others fell more sharply, including chicken wings, which dropped from $18.50 to $14.99 per kilogramme.
The decision to scrap 12.5 per cent VAT on a selection of everyday food items was pitched by Prime Minister Philip J. Pierre’s administration as a direct response to high food costs. By removing the tax, including on stages of the production process for select items, the government hopes to bring some relief to households still grappling with the lingering economic effects of the pandemic and global supply chain shocks.
Accountant Richard Peterkin said the policy is likely to reduce government revenue but called it a necessary social intervention. “Ever since COVID, people are still feeling the pain of increased prices, particularly on foodstuffs…. The most important social programme is to bring the price of goods down so people at all levels of our society can afford them.”
In cases where included items have seen no reduction in prices, Peterkin shared that old stock may need to be sold at the original price before price cuts can be applied to newer stock.
But the question of when and how those reductions appear is more complex. Director of the Consumer Affairs Department Wendy Frederick said the price drops should apply to all stock – old and new – because zero-rated items allow businesses to reclaim VAT from Inland Revenue. “It means obviously that there’d be a decrease by at least the 12.5 per cent because it’s not being applied,” she said.
Frederick’s team has been monitoring prices before and after August 2, and she says their data shows most businesses have reduced prices on qualifying goods. However, she noted that complaints have been reaching their office, but adds that many public complaints stem from items that are not on the official 70-item list, or from products in sizes not covered under the policy, such as tuna tins over 6 ounces or 200 grammes.
Some items, she added, were already VAT-exempt before August, and now fall into the zero-rated category. While businesses are not legally compelled to lower prices on those goods, Frederick said they now can claim back input VAT and pass those savings on.
“We cannot force, but we can enforce,” she said. “It’s a matter of education and businesses understanding that they can.”
The government has pledged to track the prices of all 70 zero-rated items in the months ahead. But Pierre has been candid about the limits of the effort, noting Saint Lucia’s inability to influence the price of imported goods and freight rates.
The opposition sees it differently. United Workers Party deputy political leader Guy Joseph has accused the administration of political theatre, arguing the price cuts should have been immediate. “What a disappointment to every Saint Lucian who walked into the supermarket a day after Emancipation,” Joseph said at a press briefing on Wednesday.
Whether shoppers will see deeper relief by the end of the month may be the next big test for the government’s promise.
