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Concerns over social implications of impending tax increases

Opposition Senator Neilon Franklyn - increased taxes on alcohol and cigarettes will impact on the disposable revenue of low and middle-income earners

Come 2023, the citizens of Grenada will see increases in taxes on Sugar (and) electricity, the imposition of the environmental levy on water, and increases in contributions to NIS (National Insurance Scheme). If this is not a slap in the face of the middle class, those in the lower income bracket, I don’t know what is.

Those were the words of Opposition Senator Neilon Franklyn who sought to paint a picture of the pressure now on the backs of Grenadians who will be required to spend more to maintain their standard of living when the proposed new tax measures take effect in February.

The Opposition Senator advanced the argument while making his contribution to the debate in the Upper House on the 2023 budget, which identifies taxation as an area that will drive the government’s revenues for the New Year.

Sen. Franklyn has also expressed concern over the government’s intent to raise Excise taxes on alcohol and cigarettes, expressing the view that this can lead to “serious, social implications.”

He contended that “people who are addicted to these goods, would not purchase less of it in response to the tax increase.”

“In fact, what would happen Madam President is that while their income remains fixed, and the cost of these goods go up, the disposable income for the household will be reduced,” he told the Upper House while expressing the view that the government should work towards breaking the addictive habits, through rehabilitation and education rather than ad hoc tax increases.

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Noting that cigarettes and alcohol are among undeclared goods allowed to enter the country, the Opposition Senator warned that increased taxation will result in the smuggling of these goods into the country.

Pointing out that the “link between higher taxes on these commodities and smuggling at the ports of entry is directly proportional,” he expressed the view that “the officers at Customs will need help.”

With over EC$600 million in outstanding taxes, Prime Minister Dickon Mitchell said his government will allow a tax amnesty for 12 months in the New Year.

The 2023 budget statement indicated that the 6-month old Congress government is expecting to collect an estimated EC$ 739.3 million from taxes in 2023.

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