No End in Sight for Conflict in Ukraine; TCI Gov’t Rolls Out $15 Million Tax Break to ‘Hold Down’ Costs

By Deandrea Hamilton

Editor

#TurksandCaicos, March 16, 2022 – Tax cuts worth $15 million were announced by Washington Misick, Turks and Caicos Islands Premier as a first step toward helping to “hold down” the escalating cost of goods in the marketplace; he addressed the nation on Tuesday March 15 in a press conference carried live.

Premier Misick said the conflict between Russia and Ukraine has exacerbated an already record-setting inflationary period as the world trudges out of the Coronavirus pandemic.

“Even before the crisis started, or the conflict started between Russia and Ukraine we were already experiencing high rates of inflation and we spoke to you and told you that we would be dealing with it and dealing with it by the appointment of a commission to look at minimum wage and some other issues.  That Commission has been appointed and the work is now beginning on that front,” he said on Tuesday evening.

While his government is prepared to swallow a budgetary loss of $15 million dollars, at this time, it could be that more action is needed as the country’s leader expressed uncertainty about an end to the conflict which has already claimed 691 lives and has forced three million people to flee the country.

“The conflict is not over, it is far from over and we cannot at this stage, predict with any degree of certainty what will happen as we move forward but the Turks and Caicos Government has taken into consideration the fact that the cost of the conflict will further impact the cost of living and the quality of life as a result of that. So we come today to speak to you about the initial package of relief that we will provide to try to mitigate the serious impact on the consumers of the Turks and Caicos Islands and they focus on food and fuel.”

Recognizing that the two eastern European countries together are super powers in oil and wheat production, the Premier somberly shared what intervention was approved at Cabinet, for now.

“There is a tax, which is an 85 cent levy per gallon on fuel; it is actually sometimes referred to as the additional duty on fuel and then there’s also the CPF.”

The Customs Processing Fee is a 7.5 per cent tax on the purchase value of the goods.

Government has decided to trim both.

“The Government has agreed, in Cabinet to provide a $15 Million package; a relief worth $15 Million for the time being,” said Hon Misick, “over the next 12 months and depending on how the situation unfolds, we will then be revisiting the concessions we are providing.”

The fuel sold at the pumps is taxed; the TCI Government takes from each gallon sold, 85 cents.  That fuel tax will be reduced by 25%, said the Premier, which translates to the consumer saving 21 cents per gallon.

Government is forgoing collection of $2.7 million dollars due to this concession which takes effect from April 1.

“In addition to the fuel, there’s also proposed a CPF which now stands at 7.5 per cent, that will now be reduced to 5 per cent.”

Right now, prices at the pumps in the Turks and Caicos Islands resident for regular fuel is almost unbearable.  One fuel station is already past $7 per gallon for regular gasoline.

Nearly 100 per cent of what people in the Turks and Caicos consume is imported, more than 85 per cent of the imports are from the United States and around 14 per cent is from the region, according to 2019 statistics.

“Things have gotten significantly worse as a result of the war between Russia and Ukraine.  A little known fact until very recently, between Russia and Ukraine – they actually together produce 50 per cent of the world’s wheat and they are of course super producers of gas and oil; so today what we have already noticed is that the price has gone up significantly at the pump; supply lines and supply chains have started to tighten already.”

Now that the announcement is made outlining what Cabinet has decided in order to soften the blow on local prices due to the global inflation, E. Jay Saunders, the Minister of Finance and his Consumer & Trade Department must meet with local fuel suppliers, utility companies, grocers and other retailers to communicate the changes and expectations.

The hope is the Commercial sector, which has never before experienced any policing of its pricing, will need very little in terms of spot checks.

Government is optimistic these entities will do the right thing by passing on the full savings to consumers in support of their relief package for residents of the Turks and Caicos.