As part of measures to provide continued relief to people, Finance Minister Dr. Ashni Singh announced on Monday during the budget presentation 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.
“This measure will be kept in place while fuel prices remain elevated. At current prices, this measure results in Government foregoing an estimated $40 billion annually,” Dr. Singh said
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.
“Recently, we have seen an increase in freight prices associated with bottlenecks in the Panama and Suez Canals. In order to mitigate transmission of escalation in freight prices, I wish to announce an extension of this measure for a further 12-month period from January 1, 2024 to December 31, 2024, at a cost of over $6 billion,” Dr. Singh said.
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.
