Manning says food subsidy would lead to corruption

Prime Minister Patrick Manning says he's not planning to subsidize food to deal with spiralling costs because experience has shown that it would lead to corruption. And he says he's not even considering removing the value added tax (VAT), since most food items are already exempt from the VAT and prices have not come down.

"It is very unlikely that government will subsidize food prices because we have gone that way before and we know what that leads to...It leads to shortages, it leads to black marketing, it leads to corruption big time," Manning told reporters, adding that it is a global problem.

He made the comments in San Fernando at the opening of a community centre in his San Fernando East constituency. He said Minister of Legal and Consumer Affairs Peter Taylor would address the nation within the next week on the food issue.

"Let the minister make his contribution and then we will talk. But it is unlikely that government will subsidize food."

He dismissed the idea of cutting the VAT off food items. "If you check it, we have removed VAT on nearly all food items and the one thing we are sure of, is that it has not resulted in a reduction in prices. "

He said the explanation for that is that the "the market can stand it." He said such a move would play into the hands of merchants who would then increase the margin of their profits, so the consumer would not benefit. "That has been our experience," he said.

Most food items have been on the rise since the beginning of the year. Flour, rice, dahl, sugar, milk, butter cheese, eggs, poultry, meat and vegetables have all increased. For some items, such as flour, consumers are paying 39 per cent more and others items have gone up between 80 and 100 per cent. And there are shortages of many food items.

The government refuses to take responsibility for the food crisis. It blames supermarkets for price gouging. And consumer affairs minister Peter Taylor has even told people to boycott supermarkets. Manning insists that high food prices is a global issue.

But owners claim they are not to blame since they are only responding to the same reality of rising costs not only for food but every other item that goes into doing business.

And on Thursday the opposition United National Congress Alliance (UNC-A) issued a statement accusing the government of failing in its responsibility of dealing with the food crisis, adding that it is also inciting violence against supermarket owners and their families.

Read the story: UNC-A accuses government of inciting violence...

Last week the electricity commission announced a 30 per cent increase for power, effective May first. And water rates are also expected to go up. Such prices increases add to the cost of doing business and increase the price of goods and services.