THE HIGH COST OF LIVING in this country is probably the most discussed issue by Barbadians.
Whether the focus is on food prices, utility bills, rents, legal fees, bank charges, or electronic gadgets, the lament is always the same. And what makes prices here more difficult to tolerate is that the same product is often much cheaper in the United States and in most other Caribbean islands.
One reason often advanced for our high cost of living is that taxes and duties must be such as to enable Government to earn enough money to provide the social amenities Barbadians have come to expect.
Despite such benefits, many are losing their patience over the continuing spiral in prices, with no seeming solution in sight.
My assertion here is based on the overwhelming response to this newspaper’s invitation to readers to call, text or email their concerns/comments regarding rising food prices, and the suggestion by two Government ministers that merchants here were practising price-gouging.
Imported goods
Though this issue is a complex one with both local and international considerations, the most significant component influencing the high cost of living here is that more than 95 per cent of goods used here must be imported.
And it is Customs classification that determines the duties paid. Then VAT must be added, along with markups of both the wholesaler and retailer.
Some of the larger companies import the products, then distribute them through their own outlets, as well as to smaller businesses. They are therefore wholesalers and retailers and can put on markups at each point.
It would be interesting to find out the markup the wholesale arms put on to the products they pass to their retail outlets, compared with the price at which they sell those same items to other retailers, especially the small shops, which can only take limited quantities.
Operating costs
What the retailers actually charge is influenced by their higher operating costs – rent/mortgage, equipment, salaries, utilities, and so on.
In this chain of requirements, the one factor causing the most worry in recent months and cited by some distributors as well as the president of the Customs Brokers Association, Louis Forde, as contributing to the hiking of consumers’ bills is the reclassification of items plus certain fines and fees at the Bridgetown Port.
According to a couple of leading businessmen, the Customs Department has been engaged in the reclassification of a variety of items, which have attracted sharp increases in duty. Because of this, Forde is calling for an independent tribunal to resolve problems that arise when goods are reclassified.
At present the Customs officers do the classification and when importers cry out, a tribunal headed by senior Customs officers adjudicates.
In a case cited in the last SATURDAY SUN a popular fruit-flavoured concentrated juice used by hotels and restaurants has been held up for some weeks now as it has been reclassified by Customs and the duty is now 40 per cent rather than 20 per cent.
Matter of policy?
Why is Customs doing this? Is this a technical matter or one of policy? Can the Ministry of Finance, under whom the Customs Department falls, explain the reclassification increases?
Whether a directive or not, the impact of this can be seen on consumers’ bills. One example cited in the SATURDAY SUN was of pie filling. A package of this was retailed for $14.45 last March but by last December cost $28.19.
The customs tariff on the product had moved from 20 per cent last March to 140 per cent as a result of reclassification, moving the price to $25.99. Last July, due to a price increase, it went to $27.55 and as a consequence of the 2.5 per cent VAT increase it went to $28.19. in December.
World market
Given the mounting commodity prices in the world market, perhaps it is time to review all duties on food so that we can strike a balance between the Government’s need to earn duty, the businessman’s need to make a profit and the consumer’s right to a fair price, external influences permitting.
Hopefully, tonight, at 7 p.m. at the St George Secondary School, when The NATION’s series of town hall meetings begins, with the focus on the high cost of living, we will get some answers to these questions. I live in hope.