Govt handcuffed on flour, rice taxes

Although Government plans to approach the Caricom secretariat to remove the Common External Tariff (CET) on milk, it will be difficult to get taxes removed from rice and flour, said Minister of Legal and Consumer Affairs Danny Montano. In his contribution to the 2005 Budget debate in the House of Representatives yesterday, Montano said two flour mills will be established this year to give competition to the National Flour Mills. “We expect that competition will drive the prices downwards, and if doesn’t then we will do something about it.” In the case of rice, he said major regional producers, Belize, Suriname and Guyana will object to the removal of CET. “It therefore becomes beholden on our farmers to produce more at a lower price,” said Montano. This statement prompted the quip from the Opposition benches, “But yuh close down Caroni.”

Montano devoted most of his Budget presentation responding to concerns about the high cost of food and explaining the factors impacting on local food prices. Montano also cited the rising cost of food around the world. While many people had hoped Government would provide relief in bringing down the price of rice and flour, they were not among the items mentioned in the Budget. Prime Minister Patrick Manning on Monday announced that Government will remove CET from milk, split peas, red beans and cheese and removal of Value Added Tax from coffee, cocoa, cane sugar. Montano said Government had received information that there was going to be a manipulation of chicken supply to raise prices to $5/lb. He said “one of the major tools” which Government could use against high prices is the Fair Trading Bill.

Montano said one of the problems for the yet to be tabled bill was that it required a constitutional majority. “This Bill will give the Government, and moreso the people, the power to deal with cartel arrangements and unfair prices.” Montano assured that Government had no intention of destroying the poultry industry and is pro-business, but he said it will ensure that chicken producers “do the best they can for the people of TT.” Earlier in his presentation, Montano said between 1995-2001 there was an 88 percent increase in the price of food. He said for the period 1995-2003, the food import bill rose from $1.3 billion to $1.9 billion — a 36 percent increase. “The more we import, the more we are vulnerable to cross escalation over which we have no control.” Outlining how TT will work toward “food security,” Montano said 68,614 acres of Caroni land  (out of 76,603 acres) will be used for production of food.