The St Lucia government has announced a marginal increase in the price of fuel as it warned that the global events that have led to increases in the price of oil will seriously affect its ability to raise revenue and maintain social programs.
Prime Minister of St Lucia Phillip J. Pierre in a radio and television broadcast on Sunday night, said the government has already started to feel the impact of less revenue being collected as a result of the ongoing situation that he said was “beyond our control.”
He listed among them the military invasion of Ukraine by Russia and the resultant high prices for oil and petroleum products on the global market.
Pierre said while his administration remains committed to the prudent management of its finances it is endeavoring to mitigate the anticipated pressures of increases in imported goods.
“Consumers are therefore urged to adjust their consumption as much as possible to minimize the burden these price increases will have on them,” Pierre said, adding “we will continue to manage this extraordinary difficult situation.
“We are not alone in this. Other countries across the world are grappling with high prices of goods and services,” Pierre said, adding that his government has decided to strike a balance between having to subsidize fuel prices and protecting the consumer.
“Effective March 21, 2022, the price of gasoline and diesel will increase by one dollar (One EC dollar=US$0.37 cents) from EC$13.95 to EC$14.95 a gallon. The government of St Lucia will continue to subsidize the 20- and 22-pound cylinder of cooking gas.
“We believe this is the best compromise at this time, which leaves the government with excise tax revenue of only EC$0.27 cents on gas and EC$0.19 cents per gallon on diesel, much less than the four dollars excise tax budgeted by the former government,” Pierre said.
In his broadcast, Pierre said the shortfall in revenue will have serious implications for the government’s “already strained cash flow and its ability to make critical expenditure in areas such as health care, education, social assistance, wages and salaries and debt payments.”
Pierre said that the collection of excise tax on gasoline and diesel is needed to finance government operations including the management of the coronavirus (COVID-19) pandemic.
“If retail prices are kept unchanged, these critical government functions and services may be jeopardized to the extent that the government may have to cut or defer expenditure on vital services, increase domestic payables which are already in excess of EC$150 million or borrow more or increase income tax.
“Given the increase in prices in the most recent shipments following the invasion of Ukraine, the government will only collect zero excise tax revenue for fuel, but it will incur a subsidy of EC$0.73 cents a gallon on gasoline and EC$0.81 cents per gallon on diesel if prices remain the same.”
Pierre told the nation that this will amount to a subsidy of EC$1.1 million monthly compared to a “targeted positive excess of tax revenue of EC$5.2 million”.
Pierre said the subsidy will increase further should international oil prices, which are now hovering above US$100 a barrel continue on the upward trend in the short run if the Russia/Ukraine war escalates and disrupts the global economy even further.
“We need revenue to provide the needed essential services to the people but also to increase resources to the police in the fight against the disturbing crime wave,” he told the nation.
CMC/
