Caribbean governments and regulators have room to ease living costs by examining the taxes, port charges and business markups added to imported goods, economist Professor Emeritus Andrew Downes said.

Delivering the 28th Sir Arthur Lewis Memorial Lecture, Downes explained that while the region is vulnerable to overseas price increases, domestic decisions also influence what consumers ultimately pay.

He outlined how a product’s original price rises as insurance and freight are added, followed by port handling charges, customs duties, special levies and applicable consumption taxes.

Once goods reach wholesalers and retailers, business overheads and profit margins add further costs.

Downes, a former chairman of the CARICOM Competition Commission, said understanding those individual components helps governments identify where policy changes could provide relief.

He pointed to Barbados as an example, describing an approach that changed the basis for calculating value-added tax to exclude freight and insurance costs when those expenses were rising sharply.

Governments can also consider waiving selected duties or other charges, he said.

Downes explained that imported costs spread beyond supermarket shelves. Higher fuel and electricity expenses can raise the operating costs of businesses providing a wide range of goods and services, which may then pass those increases to customers.

However, he said businesses need to earn a reasonable return, and the role of competition oversight is to examine whether their conduct and pricing are justified.

Drawing on his experience with the Barbados Fair Trading Commission, Downes described cases in which companies were required to explain their prices or proposed increases.

He said small Caribbean economies may only have room for a limited number of suppliers in some sectors, making scrutiny of how dominant businesses behave particularly important.

Downes also cautioned against relying on prolonged price controls. He said controls should target carefully selected goods for limited periods, warning that restrictions which make sales unprofitable can encourage shortages and informal markets.

The lecture, titled “Competition, Regulation and the Caribbean’s Cost of Living Problem,” examined how competition policy and regulation could help address pressure on household budgets.

This article was originally published by Antigua News Room. Read the original article here: Taxes, port charges and markups offer scope to ease living costs, economist says.