The SVG government says VAT will be zero-rated on nine additional items of food, and adult pampers with effect from November 3, 2025.
These items will join several other food items on which no VAT is currently imposed.
No VAT is currently being paid on chicken and turkey wings, backs, and necks, and on several other food items; in some cases, VAT is exempted, Prime Minister Ralph Gonsalves stated.
“However, in looking at the list of food items on which there is significant consumption, in value terms, the Cabinet decided to take nine of them off the list for VAT payment. These items are: Other chicken parts such as thighs, leg quarters, and so forth; processed cheddar cheese; canned tuna; canned sardines; chicken sausages (all types); cereals; lentils; and categories of health drinks like Ensure and Supligen. Removing VAT on these food items and adult pampers will cost the Treasury about $8 million annually, but continued, expected economic growth will cushion this loss to the Treasury”.
Gonsalves says this surgical approach, rather than a general swinging cutlass-or-axe approach, will better serve the consumer and the country.
“To begin with, a selected menu of items makes the removal of VAT on them far easier for the Ministry of Trade, to monitor, than a general removal or a cut across the board of hundreds of commodities and services; thus, the consumer is likely to benefit in the targeted way in which the government has decided. A generalized, sweeping removal of VAT by one-fifth as suggested by some persons with absolutely no responsibility for governance, will result in a loss of revenue of $60 million per year; this wide, general sweep of VAT cuts cannot be properly monitored; in any event, experience elsewhere has shown that sweeping, generalised slashing of VAT puts money in the pockets of supermarket owners and merchants, but does not result in a reduction of prices for the consumers”.
Gonsalves says if any government were to reduce VAT by $60 million, it would have to increase other taxes on the people to make up for the revenue loss. Or it will have to cut necessary expenditure.
“The people of St. Vincent and the Grenadines can always rely on experienced, knowledgeable hands to do things sensibly and responsibly for the people’s benefit”.
Gonsalves says those who clamour for a reduction of VAT on domestic electricity consumption appear to be ignorant of the fact that nearly 90 percent of the consumers do not pay VAT on electricity because their consumption does not reach over 250 units monthly, the level at which VAT is attracted.
“Mostly, the well-off people consume electricity above 250 units monthly; hardly anyone from poor or hard-pressed families pay VAT on electricity in St. Vincent and the Grenadines”.
In total, the cost, of the bundle of initiatives for the people’s relief for the remainder of 2025 amounts to almost $20 million, most of which is time-bound for the remainder of 2025.
The initiatives set out for 2026 will cost the Treasury under $35 million.
