While spelling out the benefits that Anguillian residents would derive from the exemption of GST on diesel, gasoline, and cooking gas, the Honourable Premier, Dr. Ellis L. Webster, also indicated that the Government will be incurring a great loss from these exemptions. He made his remarks during the sitting of the House of Assembly on Friday 30th June, 2023.
Initially, the Government had granted tax relief status on all fuel including LPG (cooking gas) with the imposition of GST in July of 2022. Tax exemption on fuels was granted for one year, from July 1st 2022 to June 30th 2023.
However, due to the nation’s reliance of fuel as an essential need, the Goods and Services Tax Act, during the meeting of the House on June 30th, was amended to pass permanent GST exemption on all fuels. This would mean that the Government stands to forfeit significant revenues in this sector, as it has lost an amount totaling some EC$7 million for the tax-free period thus far.
The Honourable Premier who is also the Minister of Finance, gave an analysis in the House: “Madam Speaker, by not imposing GST on gasoline, diesel and LPG, or cooking gas, the revenue loss has been EC$7.4 million from July 1st 2022 to June 30th 2023. I say that because whenever there is a revenue loss, it has to be made up from somewhere. We would either have to cut expenditure, which usually means cutting essential services such as health and education, or we would have to limit output.”
“Madam Speaker, there have been many statements made about cutting the 13% GST rate to less than 13%. But we have levied a 13% GST rate even though it was proposed to be 17%. The Interim Good Tax (IGT) was already 9% which was imposed long before we came into administration,” Dr. Webster said. “So, we added a 4% raise on that 9% to make a 13% GST rate.”
“If we would cut the rate,” he observed, “then we would have to limit the exemptions. And here we see the GST Act carries exemptions on gasoline, diesel and cooking gas, healthcare services, education services, water services, plus electricity. These are all exempted from GST.”
Premier Webster also made mention of another loss due to the deletion of excise taxes on gasoline: “Further to that, we are also incurring a loss on the removal of the excise taxes on gasoline,” he said. “This is projected to be another revenue loss of EC$4.24 million that we have to account for and make up. We can’t come up with a policy to remove these taxes without having the ability to fund the losses. In this case, we would have to make cuts that reflect such loses.”
The Premier went on: “Madam Speaker we extended the removal of excise tax on gasoline until December of this year, and that is projected to be another loss of EC$2.12 million. Therefore, with the existing EC$4.24 loss and the projected EC$2.12 loss, we are giving up over EC$6.0 million in revenues on excise tax alone. Then, the projected loss of GST on fuels for the next six months, ‘til December, would be half of EC$7.4 million, which would be EC$3.7 million.”
“That is a lot of revenue (over EC$17 million), Madam Speaker, to ensure that the people of Anguilla get a reduced cost of living when we keep down the cost of fuel. By keeping down the cost of fuel, we will be also keeping down the cost of electricity, since ANGLEC used diesel to produce electricity,” he said.
