As supermarkets across the country prepare to implement the reduced rate of Value Added Tax (VAT) from 15 per cent to 12.5 per cent which takes effect on February 1, consumers falling into the lower income and lower middle income bracket say they will end up paying more for less.
With the Government slapping on a 12.5 per cent VAT on basic food items which were previously zero rated, the average lower middle income earner with a monthly salary ranging from $5,000 to $7,000 says his or her money would now have to be stretched even further.
Eugenia Amoy, 42, a freelance photographer who earns close to $8,000 depending on the time of year, said her grocery bill amounts to $800 weekly.
A single parent of three including a ten-year-old, she said her items usually included packages of dried peas, tomatoes, local and foreign cereal, oil, bottled water, cheese, apples, rice and local and foreign snacks.
Coupled with this she has to pay a $1,200 mortgage and $3,600 a term in school fees for her son who attends a private primary school.
Twice a month she buys fresh produce costing $400; every other week she buys two chickens at $50 each.
Amoy will now have to fork out more for saltfish, especially the foreign kind which her family prefers.
Prime Minister Dr Keith Rowley had said that imported saltfish, considered a staple in many homes, would be subjected to the full tax regime.
Saying her weekly grocery bill would now be increased by between $300 and $400, Amoy said she would be looking at a second job to cushion the increase.
“I would normally shop by brand...because of the quality. But this is something of the past because I will be looking for the cheaper items including that of toilet paper because at the end of the day it is a strain on my finances which I could no longer afford,” Amoy said.
But while some say the new measures would take a toll on their pockets others said the increase would not necessarily be felt.
Rather it was a question of adjusting.
A 36-year-old taxi driver plying the Port-of-Spain to Chaguanas route who has no children said his basic food basket contains sugar, oil, chicken, bread, cheese, butter, potatoes, detergent and eggs, adding that these tally to between $1,000 and $1,200 a month.
But he said with the increase he was expected to now fork out close to $300 more.
Cost cutting, he added, would take place in other areas, namely market goods.
“It would mean I could no longer afford to buy the amount of vegetable and fruit as I am accustom. Maybe every other week I would see what I could buy. I think people need to adjust what they buy especially foreign goods,” he said.
A small grocery operated by a Chinese couple on Charlotte Street in Port-of-Spain, visited yesterday, could now be facing closure.
“At the end of the day we have workers to pay and we are worried that the business may close with the increase in prices,” a supervisor said.
He added that with the shortage of foreign exchange the establishment has been forced to import less goods.
“South where we used to import five containers of saltfish we could now bring in three. And to make a profit we might have to increase the price,” he said.
Supermarkets Association responds
President of the Supermarkets Association Dr Yunus Ibrahim agreed that some consumers would now have to pay more.
But he disagreed that there could be job losses and closure of small businesses resulting from the move.
“I don't think anyone should be increasing their final price to add VAT...I don't see the need for it.
“At the end of the day the reality is that the public needs to choose wisely,” Ibrahim added.
Owner of Maharaj Westside in Arima, Baliram Maharaj, urged that greater consultation with the wider community ought to take place before the list comes into effect.
He said in the instance of lentil peas the price had doubled compared to the original price last year as this was due primarily to international drought.
Items with no VAT after 2012
In 2012 former prime minister Kamla Persad-Bissessar reported to Parliament that the People’s Partnership government had removed VAT on thousands of items by Legal Notice 365.
Among them were:
all sausages
all juices
artificial sweeteners
baby food
bacon
banana chips
barbecue sauce
all biscuits and cookies
black eyed peas
cake mixes
chick peas
chicken nuggets
cocoa mix
coconut milk
creams and creamers
dates
french fries
fruit cocktail
fruit punch
garlic sauce
jams and jellies
lentils
mayonnaise
oats
peanuts
pepper sauce
picnic ham
pigeon peas
pineapple slices
pink salmon
plantain chips
prunes
red beans
salad dressing
shortening
soups
soy milk
teas
turkey
wafers
waffles
yogurt