Finance Minister, Camillo Gonsalves
News
November 22, 2022
Excise duties being brought in alignment with Common External Tariff

The Government of St Vincent and the Grenadines has made the move to bring excise duties in line with its regional counterparts with the passing of the Excise Tax Amendment Bill in the House of Parliament on Monday, November 21.

Minister of Finance, Camillo Gonsalves tabled the Bill which is aimed at amending the customs tariff heading of goods from January 1, 2023, in agreement with the Common External Tariff (CET), which is used by Caribbean Community (CARICOM) member states under the Revised Treaty of Chaguaramas.

“What the Common External Tariff does is, if a product is made inside CARICOM it should be cheaper, it should move more freely and it should be less taxed in and among CARICOM countries as opposed to a similar product that is made outside the CARICOM region. It becomes a uniform tariff adopted by CARICOM.”

The Minister of Finance explained that the CET is based on the Harmonized Commodity Description and Coding system, developed by the World Customs Organization (WCO), used by over 180 countries and updated every five years.

“We are lagging behind, we are up to the seventh version but the version that is currently operating at the Port in SVG is HS 2007. We missed 2012 and we missed 2017 so we are trying to jump ahead … to move to HS 2022”.

There are a total of 351 sets of amendments under HS 2022, Minister Gonsalves said which include changes to the classification of smartphones, tobacco products and drones.

“We still have on our system one code for cell phones, whether they are smart phones or multifunction devices and they wanted to create the distinction so that it is necessary to charge different taxes and tariffs on smartphones as opposed to other phones, on drones as opposed to aircraft. The changes recognize that the subheadings we currently have do not adequately represent the technological advances in all these sectors and create gaps in trade, in application of tariffs and the precise statistics on what is imported,” he explained.

In outlining the benefits of the CET for Vincentians businesses, Minister Gonsalves said:

“One option for a retailer is to continue buying from an outside source, paying a higher duty and passing an increased cost onto the customer, that would defeat the intent of the common external tariff… when the excise duty on a product produced outside the region goes up, you should look within the region to buy it.”

He pointed out that the local flour mill, ECGC, “would not survive without the CET”, adding that there are products where the CET has been revised downwards as CARICOM has determined they are not readily available in sufficient quantity in the region, whereas upward revisions have been made on some products such as condensed milk, as production occurs in sufficient quantities in Caribbean countries.

He added that there are some items that The Council for Trade and Economic Development (COTED) has indicated where excise duties should be increased as “those products exist in sufficient abundance and quality within CARICOM”.

These products include coconut water, fuel oils, hybrid vehicles as well as milk and cream.

Minister Gonsalves called on members of the private sector to note the changes to product classification and excise tax duties under HS 2022 when they come into effect next year.