Grenada delays tax increase on sugary, alcoholic and tobacco products

January 26, 2023 in Regional

The Grenada government has announced a one-month delay in the implementation of an increase in the Excise Tax on alcohol and tobacco products as well as Value Added Tax (VAT) on sugar, sugary or carbonated drinks.

“In relation to the tax on the sugary drinks we are going to push back the date for this to become effective from the first of March rather than the first of February because we need the additional time to make sure that the items are clearly identified, clearly classified and clearly published and that there is no ambiguity,” Prime Minister Dickon Mitchell told a news conference.

Mitchell, who is also the Minister for Finance, had in his budget statement last December announced that as of February 1, this year, alcohol and tobacco product will see an increase in the excise tax while refined sugar will be removed from the zero rates VAT list and the VAT on sugary products will increase to 20 per cent.

But at the first post-cabinet news conference for the year, Mitchell told reporters that his administration wanted to have more discussions with the various stakeholders who will be directly affected by the taxes.

“We felt we needed that additional time to do so and to communicate with the stakeholders who will be impacted by this measure,” he said, as he provided more justification for the delay of the Excise Tax.

Prime Minister Mitchell, who presented a resolution for the increase to the Parliament last Friday, said that the delay for enforcement is to identify the list of products that will be affected.

“As it relates to the Excise Tax on alcohol and cigarettes we are also going to push the date back to the first of March, so that we can clearly identify all of the alcoholic items, the fact that the Excise Act was passed a long time ago and what you called tobacco when it was passed is not necessarily what you may call tobacco today,” he said.

“There are new products, for example, e-cigarettes and so on which are now on the market, and we need to make sure that we address those nuisances as part of the process, so we need the additional time to address it and so we will push the date back to March 1,” he added.

Last December, the government announced that the tax measures, Mitchell said the Excise Tax increase is aimed at recouping revenue given up through its cost-of-living relief measures. Mitchell said then that government would have lost as much as EC$30 million (One EC dollar=US$0.37 cents).

“Given the significant potential loss of revenue by the fiscal measures implemented by this Government this is just one of the many counteracting measures that the government has taken from our fiscal policy to address this,” Prime Minister Mitchell told Parliament.