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Wheatley suggests sales tax as price reduction measure

- Agrees with criticism of opposition on Customs and Duties Bill
Natalio Wheatley. Photo: VINO
ROAD TOWN, Tortola, VI - The criticisms by the opposition to the Customs and Duties Bill, which was passed in the House of Assembly on Tuesday February 14, 2012 have met with much criticism as well, but radio talk show host Natalio Wheatley believes the opposition were up to the challenge in the House and finds himself agreeing with their arguments.

After a lengthy Committee stage, the Customs Management and Duties Amendment Act 2012, which needed a majority vote for it to proceed after being introduced following opposition from Members of the Opposition, was passed in the House of Assembly.

The bill was amended to make way for duties to be relieved from the cost of Freight and Insurance of imports by businesses, which would cost Government some 3.7 Million dollars per year.

Wheatley said he agreed with Hon. Andrew Fahie that freight was the main problem to be tackled for price reduction and to do so was to subsidise local shipping companies to make it profitable for them to go to Miami to provide competition to those foreign shipping companies that have the cost of freight very high.

He said he also agreed with Hon. Julian Fraser that Government should not be hoping that businesses pass on the savings to consumers but should table legislation for consumer protection.

According to Premier Dr. D. Orlando D. Smith, his Government saw the need to revive the economy and the bill is seen as one way of stimulating the business sector and that Government was also looking at other ways of enhancing commerce.

Mr. Wheatley said he also had to side with Hon. Fraser on the point that the savings expected to be passed on were not enough. “I mean to come to the public and say you going to solve the cost of living and in the next breath start speaking about you are going to see a 1 cent reduction on a can of milk for me I see that as completely ridiculous...and then to come to the House of Assembly to say it is better than nothing…people didn’t put you in the House of Assembly to do something that is better than nothing, they put you in the House of Assembly to solve their problems and if this initiative is part of a larger initiative tell us what else you plan to do, don’t keep it a secret,” Wheatley said.

“We give them support as the Government of the day and we want them to do well but at the same time we have to hold them accountable and I think the opposition did make some good points on the day and those were some issues that need to be solved.”

Meanwhile, Wheatley also recommended introducing a sales tax that would eliminate or greatly reduce the customs duty. “Because high tariffs at the ports are designed to lessen importation,” he argued.

23 Responses to “Wheatley suggests sales tax as price reduction measure”

  • bvi commission (18/02/2012, 09:41) Like (0) Dislike (0) Reply
    if evryone say a 1%, 2% or 5% saving not enough - or aint worth it- i suggest they all take that 5 from their monies and give it people that need it- something is better than nothing and if one person benefits or sees their life improve then it is worth while. who is mr wheatley to comment anyhow- give a man a mic and he be heard but dont mean what he say needs listening too
  • qc (18/02/2012, 11:20) Like (0) Dislike (0) Reply
    another idea for consideration..hope the NDP listening
    • WTF (18/02/2012, 14:12) Like (0) Dislike (0) Reply
      yes another great idea with no thought!!!! sales tax will lead to higher prices for new goods in the shops thats simple as ABC this guys needs to think before suggesting to elected officials ideas that didnt get him elected.
  • street man (18/02/2012, 13:03) Like (0) Dislike (0) Reply
    NDP should do what Fraser said... drop import duties all together now that will be bold and something real!!!!
    • Bose (18/02/2012, 16:04) Like (0) Dislike (0) Reply
      NDP ain't got the BALLS, and frankly I'm not sure the VIP does either. It would take a person like Fraser who'es concern isn't about rich MERCHANT friends, or whetherhe will loose the next election, to do something like eliminating customs duty. That's what happen when he brought Biwater to us. When it is all said and done, 10 years from now everyone will be thanking Fraser.
    • Crank Shaft (18/02/2012, 16:39) Like (0) Dislike (0) Reply
      And as soon as they drop it Fraser will come back asking if they crazy and who will make up the shortfall. There's no winning with you guys, you will always play opposites with the people's issues. No different to the republicans in the USA. Regardless of what you suggest, they always have some nonsense to say.
    • Tram (18/02/2012, 18:18) Like (0) Dislike (0) Reply
      Fraser's idea to completely eliminate import duties is terrible, and he should know better. Duties are there for a purpose. They provide revenue but they also help regulate what is coming in. I agree with what the NDP is doing but if I have to support any alternative, it is the one presented by Andrew. The high cost of freight is the real issue and we need to tackle it head-on (by what-ever means necessary).
      • Sick Sick (18/02/2012, 19:57) Like (0) Dislike (0) Reply
        "Tram", dont be too quick to dismiss Fraser's idea. You said, "Duties are there for a purpose. They provide revenue but they also help regulate what is coming in." The revenue Duties bring in is about $30 Million, in a budget of about $180 Million, that is about 16% of the budget, but look at the incentive that brings to importers, look at the stimulus that puts into the economy, you can get more for less, and therefore our products will be truly compettitive with the St. Thomas prices. Also, if the Government really wants to be creative and compensate for excessive loss of revenue, they can always impose A SALES TAX. As far as regulating what comes into the country, which I dont see why you need a duty for that, there will always be customs, no one is geting rid of customs. Remember whe the NDP eliminated company taxes? Do you know how much Millions that was the treasury lost?
        • Sick Sick (19/02/2012, 10:06) Like (0) Dislike (0) Reply
          CORRECTION: Not a $180 million budget, but $280 million budget, so that makes customs duty only 10% of the budget, which is even more managable for government to sustain. If they were able to cut the operating expense 7.5%, they can certainly put 10% in a depressed economy
      • beat it (18/02/2012, 23:29) Like (0) Dislike (0) Reply
        another Fraser hater who just jealous of he man...look ayo cannot beat him so get ready to join he
  • Boo (18/02/2012, 16:47) Like (0) Dislike (0) Reply
    Armchair lazinomics don't run a country!
  • E. Leonard (19/02/2012, 01:08) Like (0) Dislike (0) Reply
    If custom duties are eliminated, how will the approximately $30M lost be replaced? Government operation is funded thru taxation and borrowing. Borrowing is out. Thus, a new revenue stream will need to be identified to replace custom duty, a key revenue source. Further, eliminating it will require replacing it with a source that can generate the lost revenue and be less burden some on the average citizen. If custom duties are eliminate altogether, a huge opportunity cost will be incurred. Businesses will be elated and consumers may see some relief but it will leave a big hole in the budget. Some horizontal or even vertical cuts of some services may be needed. Sowande's sales tax suggestion is an option. But it is a regressive option. The poor will pay a larger portion of their income. For example a 5% tax is felt more by a $20k per year consumer than a $50k per year consumer. We need to address the high cost of living urgently but in structured and effective way. The first course of a action may be to appoint an adhoc committee to find the root cause of the problems and to recommend solutions for addressing the problems. Nonetheless, although there is a cry for price control, it is not the answer. Supply and demand forces should set the true price--market equilibrium. Moreover, arrrtificial price controls often times provide the opposite effect of what was intended. It often tesults in poor quality and shortages.
    • Free Soul (19/02/2012, 14:17) Like (0) Dislike (0) Reply
      @ E. Leonard - Your post are always insightful. I must say that the imports duty only tackles part of the problem. THe problem is we have wholsalers also acting as retailers and that the shipping costs here to the VI are extremely high. The fact that a wholsaler is also a shipping agent is even worst. This administration while previously in power did away with P.A.Y.E., corporate tax and made the college FREE! All three are initiatives are a loss in revenue but there was nothing put in place to recoup this lost revenue. The problem I have with some of these administrations (both NDP & VIP) is that the initial thought/idea is good at first but has serious ramifications in years to come. Simply, we cannot sustain the course we are on at the moment. It is yet to be seen if this administration has the BALLS to tackle the real issues and stop playing patty cake with them. I agree with the move to remove duty on frieght and insurance which benefits suppliers/vendors. However we have no assurance that this is being passed onto the consumers. There needs to be some price control (price ceiling on certain goods/necessities). Corporate tax was lost and we did not do anything to recoup it; they would have to find another avenue to make up this loss. The college is free but the system as it stands is currently being abused.....no VALUE FOR MONEY! Tax was made 8% across the board and taxable income ceiling raised to $10,000 which is very good for the lower income bracket and I am for that. However, we are losing on the upper elite who are earning $80,000 plus as an annual income. There needs to be a 20% tax on that income bracket. Wish I had the numbers but sure that most who are in this bracket are lawyers, accountants and trust company managers who are not Virgin Islanders and they full well know that the tax bracket in the UK/US/Canada can be anywhere from 40% and up. We need to analyze properly our economic situation and ease who REALLY needs to be eased. Enough of the rich getting richer and the poor getting poorer!!! Maintain a "healthy middle class" with vast opportunities to elevate and we will see a difference.
      • E. Leonard (19/02/2012, 18:26) Like (0) Dislike (0) Reply
        @ Free Soul, thanks for the kind words. You made some strong points on eliminating of revenue streams without alternate replacement sources, inequitable income distribution, and on getting value for money. Hopefully, the policy makers will internalized your concerns and take action. On the other hand, though, I take the view that price control is not an effective tool in lowering the rising cost of living. It is a good political talking point but very effective in lowering cost. Price controls often provide the opposite of what is intended, resulting in poor services or shortages. They are approaches to treat the symptoms instead of the root cause of the problem. L In a market economy or even a hybrid economy(socialism and capitalism), supply and demand forces set prices. Specifically, the law of demand States that more is purchase at a lower price and less at a higher price. Similarly, more is supplied at a higher price and less at a higher price. The equilibrium of these two concepts set the true price. True this is a simplification yet the core issue. demand
        • Free Soul (20/02/2012, 11:27) Like (0) Dislike (0) Reply
          Your points are noted. Yes, supply and demand should determine prices but what happens when you are basically dealing with a monoploy or cartel. We as a consumer still have limited choice. The equilibrium here in the VI is way off simplty because we do not have the proper ceilings/floors set. With that said, any corporation will seek to maximize profits for its shareholders even if it means price gauging.
      • Free Thinker (19/02/2012, 21:24) Like (0) Dislike (0) Reply
        "Free Soul", the proposal by Fraser in the Hose to eliminate customs duty completely did not expound on the process to viability, because I think it is up to government, after research and analysis to see what else to adjust. I believe in the total elimination, and it can work to the advantage of the economy, and here is how. Eliminate customs duty and the prices of our imported products should be reduced to those in St. Thomas, or at least become compettitive. This means going to St. Thomas to shop will no longer be based on price, and will decrease significantly, if not eliminated. Remember we eliminated company tax, and income tax, well if we have a problem with revenue shortfall, there is your answer, just reintroduce it in one form or the other. You kill two birds with one stone. Because people will now be shopping at home because of the price compettiveness, and the government will get back it's revenue through taxes. The other caribbean islands have very very high customs duty and no income tax, we will have no customs duty, and some form of income tax. St. Thomas has income tax, but no customs duty, they are our target. The NDP need to be creative, they won the government, they can't expect to keep it by doing the same things the VIP did.
        • Free Soul (20/02/2012, 11:51) Like (0) Dislike (0) Reply
          Free Thinker, I understand what you are trying to say. I do not believe in total elimination but rather reduction/adjustment. Your statement assumes that prices of imported goods would be reduced to that of USVI. How do we know this if Gov't has not implemented consumer protection or set controls in place to assure that the savings are being apssed onto the consumer? We eliminated corporate tax (big mistake but we had no choice due to international pressure) but still have income tax. Income tax should remain at 8% up to a certain income level say US$40K; 10% from US$40,001 to US$79,999 and be 20% for US$80K and higher. This is just in theory as an analysis would need to be done to see the benefits. Price competiveness should be dictated by the consumer however in the VI an unaware consumer is ripe for corporate slaughter. How many times have consumers here in the VI boycott a business for bad business practices??!! Answer: I certainly have not seen this happen. How many businesses have broken the law and Gov't 'enforce penalties'? Answer: very seldom. People go to USVI because of the price and quality. Where food imports are concerned is that 1. the wholesaling and retailing at the same time needs to be broken up; 2. Reduction/adjustment of import duties; 3. More competition in shipping/freight to the VI; 4. Implement and enforce consumer protection; quality control and price control (which can be adjusted based on global happenings).
  • BREAKING NEWS (20/02/2012, 09:36) Like (0) Dislike (0) Reply
    I think duties on FOOD and Water should be eliminated COMPLETELY.
  • Crazy (20/02/2012, 15:31) Like (0) Dislike (0) Reply
    Do you know what an introduction of a sales tax will do to the people who are already struggling to make ends meet. Some people always talking out there ........ instead of using their heads. Go mind you children!


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