Economist agrees with opposition on reduction of fuel prices

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Petra Williams (Facebook photo)

Economist Petra Williams said, in order to drive consumer spending and boost economic growth, the government should lower fuel prices, an issue raised in Parliament this week by Opposition Leader Baldwin Spencer.

The government has temporarily reduced the 15 percent Antigua and Barbuda Sales Tax (ABST) to 5 percent and many people are expected to take advantage of the four-day reduction of the tax.

This tax break is expected to boost consumer spending and spur economic growth, in an economy which some have said is not doing well.

Lowering prices at the pumps, according to Williams, would impact many sectors and cause a further stimulus in growth, including the transportation sector, the price of goods and the rate of electricity.

“For the last three years, the government has held fuel prices constant even though internationally the prices have fallen, because of course, we were in a revenue fiscal crunch and the deficit needed to be financed.  

“I think we are at that stage where now we can further stimulate the economy if we were to look closely at the price of fuel and make a downward adjustment. I think the time is right for that,” Williams said on state television.

The economy is poised for growth, according to the prime minister, and Williams noted with lower fuel prices we so could see increased taxes coming in from other areas.

She said lowering fuel prices would be a better avenue than offering an increase to public servants because it will have a more significant impact on the economy at this time (than a wage increase).

Spencer had raised the point in Parliament Tuesday that the price for crude oil has remained stable at $50 per barrel for the past year, and inquired whether the government intends to adjust the consumption taxes on gasoline and diesel so motorists can benefit.   

Prime Minister Gaston Browne responded by saying that there has been a reduction in the consumption tax.

He said earlier this year the price margin had been reduced and added that there is no evidence that there has been an increase, but that there has been a reduction in the amount of tax going to the government’s coffers.

“The price remains stable so even though there was an increase up to 60 something dollars, we did not change the price. There are other countries within the region that they adjusted accordingly. So it is a form of stabilization and one can know that there is predictability and can plan accordingly than to have a situation where you change it every three months,” PM Browne said.

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7 COMMENTS

  1. I think the hoopla about gas prices and the effect it has on Antigua’s economy, is a case of someone reading a text book and repeating what it says. Antigua is very small geographically and local transportation cost plays a very small factor in the cost of items. Most of the business places are in very close proximity to the port, practically just up the road. Wholesalers plan deliveries based on sections of the island, for which no section is far. So even if you drop the price of fuel, the cost reduction spread across items are negligible; it would not make any sense to bring down prices.

    • Yes the reduction in fuel cost has little effect on the cost of goods, taxi and bus fares but will leave more disposable income in our pockets which should spur increased consumption. As for the engine sizes, that’s a great idea although the govt imposes a luxury tax on all engines over 2 litres. The problem is with the auto manufacturers, it is impossible to get a luxury vehicle without a gas guzzling engine nowadays.

  2. On the other hand for general consumers I believe we need to look more at buying vehicle with smaller engines which would consume considerable less fuel and thus reduce our fuel cost. Antiguans tend to want to buy these gas guzzlers 2.4L, 3L, 3.5L engine vehicle and we have no where to go. If i was the government i would limit the vehicle engine sizes imported in antigua to no more than 2L engines for private use. This would significantly reduce of fuel consumption, citizens would spend less on fuel and the country would save more foreign currency since we would be buying less fuel from suppliers.

  3. Them kiss ass policitian all them do is cripple poor people them dont buy gas or car or pay for nothing all is free for them so them dont care about us

  4. Petra, what on earth is wrong with you, education has fuzzled your brain?

    How could you say that lower fuel price would be better than increasing civil servants salary pay?

    When last have you visited the supermarkets. Have you noticed that food prices are increasing?

    You are already making a salary waaaay past your quota as a non-established hpetson wearing several hats, and obtaining extra allowances and financial perks for being a long-winded jack-idle, so you do not feel the financial strain that the less fortunate ones are feeling.

    Take your cards back to the pack and shuffle them over, perhaps you will realize that Economists do not know it all, nor speak for the mass public.

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