Government is analysing Cayman’s decades-old import duty regime with a view to reducing the cost of essential food items.
Home Affairs Minister Nickolas DaCosta said the National Coalition for Caymanians is partnering with the Cayman Islands Chamber of Commerce to identify specific goods where duty could be reduced to ease pressure on Caymanians’ weekly shopping bills. Cayman imports around 90% of its food and most grocery items attract a duty rate of between 17% and 22%.
Reducing or eliminating duty on some grocery items would immediately translate to lower prices at grocery stores, government believes.
“The aim is to identify opportunities to recalibrate the customs duties that will meaningfully and positively impact the cost of living,” DaCosta said.
The minister acknowledged the review would need to be revenue neutral. He said government must maintain sufficient income to balance its budget, which includes more than $1 billion in planned spending each year over the next two years.
“We recognise that making consumables more affordable creates a more positive environment for health and cost of living, but it negatively impacts the government’s budgeted revenue,” he said.
Chamber of Commerce officials confirmed their involvement and said the review could lead to lower prices on some essential items. The organisation cautioned that expectations should be “realistic” and said the aim was to make targeted adjustments rather than wholesale reductions, given the need to maintain government revenues.
It highlighted a range of factors beyond duty, including shipping and fuel costs, that contribute to high prices in stores and insisted it is eager to work with government on other ways to cut the cost of doing business.
Currently government officials are working with the Economics and Statistics Office and the Ministry of Finance to analyse a “typical average food basket” – the basic necessities most families purchase each week – to determine where reductions could have the greatest impact.
DaCosta believes there is room for manoeuvre within the existing tariff structure, particularly on luxury goods.
“You have 0% import duty on luxury items, but water is dutiable,” he said, pointing to inconsistencies in the current system.
“Lard is duty free, but you pay duty on healthier options.”
Under one potential model, duties on certain non-essential or high-end goods could be increased modestly to offset reductions on staple items such as bread, rice, fruits and vegetables.
He said the focus would also be on making healthy food cheaper.
“It will take a full comprehensive review,” DaCosta said.
He said the Chamber of Commerce is leading the detailed line-by-line examination of the tariff schedule, with ministry officials participating in the review process. Work has already begun and the government hopes legislative changes could be passed next year and take effect in 2027.
Alongside the duty review, he said Cabinet has also approved drafting instructions to modernise the Tariff Act so it aligns with the World Customs Organization’s Harmonised Tariff Code, a technical reform aimed at improving efficiency in the import system.
Chamber seeks practical solutions
In written responses, through CEO Wil Pineau, the Chamber of Commerce said it had agreed to explore “practical measures that could ease cost pressures without destabilising public finances”.
“Our role is to provide data and private-sector insight into how duty structures affect pricing, identify anomalies or outdated classifications within the customs tariff system, and recommend targeted adjustments that could reduce costs in key categories,” the Chamber of Commerce stated.
The organisation cautioned that expectations should be realistic.
“Import duties remain a major source of revenue for the Cayman Islands Government. Any significant reduction in duties across the board would create a fiscal gap that would have to be addressed elsewhere,” it stated.
The chamber said, “A data-driven review can help identify areas where reform would have the greatest impact with the least fiscal disruption.”
While consumers may see cost reductions in some items the Chamber of Commerce warned that duties are just one factor in prices.
“It would be premature to promise across-the-board reductions in grocery prices. However, … consumers could see price relief in [some] categories.
“We also recognise that import duty is only one component of final retail pricing. Shipping, insurance, warehousing, utilities, transportation, fuel, labour, and regulatory costs also contribute. That is why this discussion must extend beyond customs duties alone to the broader cost environment affecting businesses,” the Chamber of Commerce said.
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Government should not charge a duty on healthy food. Fruits, vegetables, milk products, meats, fishes or anything not grown or produced on the island that is healthy or required (not candy, chips, unhealthy snacks). There is enough added cost to products with shipping, etc.
In reading the article, besides the concern for added costs with tariffs, government does not want to lose the tariff money!
Not in any article I have read, regarding Budget or tariffs, did the government comment on trying to cut spending!
Why does government always need more of our money???
This is a great initiative, especially the health angle. Making sugar laden food and drink more expensive will save the health infrastructure in the long run.
A noble intention but this has been tried before, to little effect at the checkout counter.
The late North Side MLA (read MP now) Craddock Ebanks, forwarded a motion back in the late 1970’s removing duty from some staples. In the 1990s, MLA Thomas Jefferson did the same on others (including milk….nevermind his ownership of a frozen yogurt franchise at the time). Did either of these duty reductions actually help the end consumer? No, because the retailers didn’t pass on the savings.
But points for NCFC for trying.
Perhaps removing duty on farmers’ equipment and supplies, zero their work permit fees and impose conditions in return. That way, local produce becomes more competitive and more available.
Pretty much all of the MLAs are fatties, so this will go well.
What does “high-end goods could be increased modestly to offset reductions” mean. The fatties may be shocked to know that the high end stuff (not loaded with chemicals/gmos etc) are the healthy option. There is a reason Tyson chicken costs half of the organic non gmo stuff