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Letter: More tax, CPF on fuel will have big economic impact PDF Print E-mail
Written by Brian K. Lightbourne   
Thursday, 01 December 2011 14:00

The increased CPF, along with the amended method to calculate the import duty and road tax payable, will have a profound effect on the overall price of fuel.

It is estimated that the fuel price will increase by 25 to 30 cents per gallon, depending on the market price of the product that the increased CPF will be applied to. The duty and road tax increase will now become a function of U.S. gallons and in turn remain constant, once the change from Imperial to U.S. gallons comes into effect, resulting in a higher amount payable.

Private sector groups representing the resort, taxi and watersports operators should be very concerned as it may be difficult to recover increased costs associated with prepaid packages in the short term. In the longer term, higher prices may create a decline in consumer demand.

We are now entering the peak season of motor-vessel (yacht) activity, and many vessels would typically make stop in the Turks and Caicos while en route to Puerto Rico, U.S. and British Virgin Islands (a pleasure craft haven) for fuel and provisions. With this tax affecting international trade (which deserves at least a partial fuel duty exemption in relation to the fuel tax), the Bahamas and Dominican Republic marina sectors will certainly benefit from this blanket application of internal taxation (impeding genuine organic growth).

Furthermore, we should be equally concerned for Turtle Cove Marina and Caicos Marina and Shipyard as by default they may no longer be internationally competitive. Any perspective buyer of the Leeward Marina must now assess their ability to compete in this area of tourism, which we are many years behind our Caribbean neighbours.

With the winter season upon us, the NYMEX price for heating oil (No. 2 diesel fuel) tends to escalate in North America, U.K. and Europe due to market demand for this product for heating purposes. This is the very same fuel that is used by Fortis and Turks and Caicos Utilities, therefore as the market price escalates into late 2011 and early 2012, the 6-percent CPF will certainly be reflected on utility bills month over month due to overall higher fuel prices.

The question should be asked when and how will the tourism based industries BEGIN to recover this cloaked tax increase? And when they do, how will the consumer react?

In short, this move by the interim administration may have far more ramifications to our economy as anticipated. While the persons that formulated (and more importantly those that approved) these increases had good intentions of closing the budget gap and to meet debt service of past abuse, these rates pose the real risk of weakening the very same variables that they based the increases on.

Brian K. Lightbourne
President & Chief Executive Officer
Caribbean Energy Distributors Ltd.

Editor’s note: The interim Turks and Caicos Islands government recently announced an increase of 20-percent in the road tax on fuel and an increase from 4 to 6 percent in the Customs Processing Fee (CPF) which is levied on all imports.

 

 

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