Minister in the Ministry of Finance, Doctor Ubaldus Raymond, has told reporters here that despite the increases in the price of fuel in the last year, prices in general in Saint Lucia only rose by .1 percent.
He asserted that this was “very instructive.”
“When we compare the increase in goods and services in the United States, Japan and Canada, they were ranging between 2 and 3 percent and these are the source markets,” Raymond explained Tuesday.
Making reference to the Economic and Social Review, the minister asserted that the main reason for the .1 percent increase in inflation was the reduction of the Value Added Tax (VAT) from 15 to 12.5 percent.
“The government understood very early that we needed to control the level of price increases in Saint Lucia and VAT was one of the areas,” Raymond stated.
He said there were some things over which the government had control and others – like increased fuel prices, over which it had none.
Raymond recalled that when the United Workers Party (UWP) administration took office in 2016, it found a bad road network throughout the country and had to decide whether to let the roads remain as they were, or fix them.
He observed that the decision was to repair the road network, but the question was how to finance it.
“The only answer was through taxation,” the minister told reporters.
“We decided that we would not continue the traditional way of just getting money out of the consolidated fund from various sources of revenue. We decided to have a dedicated tax through the excise tax and that is exactly what we did. We started a process last fiscal year when we adjusted the excise tax from 2.50 to 4 dollars and based on that adjustment, we decided to raise a certain amount of revenue based on the projections. We realised that we were not able to capture the full benefit of the increase. There were times we were collecting 3:50 – 3:60 – a shortfall in revenue,” Raymond stated.
“But as a government we realised that we had to fix the roads. So as a government decided to ensure to get the full benefit of the 4 dollars,” he said.
“Monday was the very first time of that adjustment. Now I wish to advise the public that the increase in fuel prices we saw on Monday is not necessarily as a result of the increase in the excise tax, but it has also has to do with the increase in international fuel prices,” the minister explained.
He recalled that when the Allen Chastanet Administration came to power in 2016, the price per barrel of fuel was about 48 US dollars or roughly 120 EC.
“ As of yesterday that price jumped to $68 – so almost a 40-41 percent increase in the price of fuel on the international market and obviously that would impact local fuel prices,” Raymond noted.
“So we as a government said in spite of these increases we need the revenues to fix our roads, because we have an ambitious road rehabilitation and maintenance programme and we will ensure that we undertake that programme,” the minister declared.
He said he wished to remind the public that that in 2015, the price for gallon of gas was $ 15.85 at the pumps.
“In spite of the adjustments that we have made from 2:50 to four dollars, we are still paying about 13.000 per gallon at the pump – so we are far below the gallon of gasoline when compared with 2015,” the minister asserted.
On Monday, the government announced an increase in the price of gasoline from $2.80 to $2.94 per litre or $12.75 to $13.35 per gallon, while diesel increased from $2.80 to $2.91 per litre or $12.75 to $13.23 per gallon and kerosene increased from $1.81 to $1.88 per litre or $8.24 to $8.52 per gallon.
There were decreases for the 20 Pound Cylinder (9.07 kg) from $32.65 to $32.53 per cylinder;22 Pound Cylinder (9.98 kg) from $36.20 to $36.07 per cylinder and 100 Pound Cylinder (45.36kg) from $205.60 to $204.42 per cylinder.