As part of measures to provide continued relief to people, Finance Minister Dr. Ashni Singh announced that the government will maintain the tax cuts for fuel and freight charges.
Dr. Singh reminded people that in the budget 2022, the government removed the excise tax on petroleum products from 20 per cent to 10 per cent. That tax was later slashed entirely, resulting in revenue losses of over $17 billion.
And the Finance Minister said that the zero excise taxes on fuel will be maintained as long as fuel prices remain elevated.
Dr. Singh also said that the government’s adjustment of freight charges will be extended until the end of 2023, at a cost of over $6 billion.
The government, in 2021, opted to reduce freight charges to pre-pandemic levels after it noted the marked increase in shipping costs from some countries which has moved from an average of US$2,500 to as much as US$15,000 US per 20-foot container and from US$3,500 to over US$20,000 for a 40-foot container.
Duties, Excise tax and Input Value Added Tax (VAT) are calculated utilising the cost, insurance and freight of imports, thereby allowing for the increased cost of freight to be passed on to the consumer by the importer.
Consequently, having carefully assessed the impact of COVID-19 on the economy to date, and on the prices passed on to the consumer due to the increased shipping costs of imports, President Dr. Irfaan Ali instructed that further reliefs be granted by reducing the freight charges to the pre-pandemic levels (March 31, 2020) in the calculation of customs duties, excise taxes and input VAT on goods imported.
