Leader of the Opposition Roy McTaggart has called on the government to temporarily abolish import duty tariffs on fuel and to reintroduce an electricity relief programme for residents – steps the government says it is already considering.
In a private member’s motion presented to Parliament on 25 July, McTaggart said the increase in fuel costs had a broad impact, “affecting a wide range of the average consumers’ and business’ monthly bills, including utility costs, cost of groceries, transportation costs, food preparation costs, and more”.
As the prices of fuel and other goods, and freight increase, the government has benefited from what McTaggart described as a “windfall in additional import duty”.
He noted that the March 2024 Consumer Price Index showed an increase of 1.5% in overall inflation since last year, with housing and utilities costs rising by 2.6%; health costs up by 2%; communication costs increasing by 7.4%; education costs by 7.9%; and rents up 11.1%.
Since 2021, McTaggart stated, the cost of essentials like groceries, utilities and gasoline had increased by over 25%, “helping create a severe cost-of-living crisis, significantly increasing the cost of living for families and the cost of doing business”.
He called for the government to give some financial relief to the public, by temporarily reducing to 0%, for an initial 12-month period, the duty on fuels purchased by utilities, and those used for cooking and vehicles, including diesel.
McTaggart also requested that government consider reintroducing an electricity relief programme, similar to the one instituted in summer 2022, “to reduce electricity costs for families and small businesses during the sweltering summer months”.
In response, Acting Premier André Ebanks noted that forgoing import duty on such fuels would lead to government losing $17 million over 12 months.
Ebanks also pointed out that the previous relief programme, in July-December 2022, cost government $7.9 million. A similar programme, if implemented over the same number of months this year, would cost $8.6 million, he said.
He indicated that the government may prefer to give assistance directly to people in need, rather than cutting import duty and relying on businesses to pass those cuts onto consumers.
The acting premier told the House, “The government is aware of the significant cost pressures affecting our people, and we’re considering active measures at the moment to alleviate the financial burdens of our citizens.”
He added that a half-year analysis of government budgets was currently under way and was due to be completed within the next few weeks. Once that is complete, he said, “we can then decide the ways in which we can best help our people. So, we’ll consider these proposals but consider them against other proposals, and decide which ones would have the most direct impact and that are affordable.”
Hottest months
McTaggart told lawmakers in his speech in Parliament that the urgency of his motion “is not to be understated”, adding that the months of July, August and September were the hottest months of the year, when electricity bills are at their highest.
“If our people are hurting, then it is the government’s job to offer immediate help and support to ease the pressures on household budgets,” he said.
In his comments to the House on his motion, McTaggart said he hoped conversations could be had between the government and CUC to provide “some short-term remedies to help families”, such as delaying the recently agreed electricity rate increase until after the summer – when air conditioning usage leads to increases in power bills.
The opposition leader told the House that housing and utilities costs had increased by 33% from the first quarter of 2021 to the first quarter of this year, and went to outline similar increases in other costs, such as fuel and groceries.
As the cost of living increased, there had been no corresponding increase in minimum wage, he noted.
He said the drop in import duty costs would be passed down to the customers, giving them a break on the high prices they are paying.
Government: Relief already under consideration
In response, Tourism and Port Minister Kenneth Bryan said government was already looking at its finances and assessing what options were available to assist the community.
He pointed out that the government, under the PACT administration, had previously implemented the fuel relief programme in 2022, spending about $7 million, so “we’ve done it before”.
He added, “We’re already working on it,” accusing the Progressives party of playing politics by, “in a preemptive strike”, calling for fuel cost relief for constituents eight months before an election.
Bryan said the government fully intended to assist the people, but said, “We have to do it in a managed way.”
Responding to McTaggart’s call for the government to reconsider “unnecessary spending” and reallocate those funds to relieve cost-of-living challenges for Caymanians, he asked the leader of the opposition what specific programmes should be cut. He asked if McTaggart felt scholarships, or healthcare assistance, or civil servant salaries should be cut.
Bryan also stated that there was no mechanism whereby government could force a business to cut its prices even if government does drop import duties to 0%.
At the end of the debate, McTaggart said he accepted that government did intend to take action and said he looked forward to seeing the steps the administration would implement in the near future.
The motion passed in a vote of the House.
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