By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Super Value has put a $1 million expansion of its main Carmichael Road warehouse “on hold” due to the continuing uncertainty over Value-Added Tax (VAT), its president describing the Government’s key tax reform as “terrifying”.
Rupert Roberts told Tribune Business that the Christie administration should instead introduce a “straight sales tax” if it needed more revenue, and asserted: “It sounds like a madman invented VAT.”
Noting that the cost of living in St Lucia rose by 17 per cent when it introduced VAT last year, Mr Roberts said the Bahamian private sector and consumers could not take “more pain” and even greater taxation.
The veteran businessman pointed out that Super Value’s Business Licence fee was set to triple, rising from $1 million this year to around $3 million in 2014 as a result of the last Budget’s tax increases, regardless of whatever profit the supermarket chain made.
VAT, Mr Roberts said, was “coming at the wrong time”, and he called on Prime Minister Perry Christie to “restore confidence” by listening to the concerns and revising his administration’s tax reform plans.
And, adding that he had heard many businesses had placed planned investment/expansions on hold, the Super Value owner said: “There’s no boogie man, but the fear of the unknown is leaving everyone in limbo.”
Revealing to Tribune Business how VAT-related uncertainty was impacting his own business, Mr Roberts said: “I was about to add 10,000 square feet to our warehouse on Carmichael Road to take care of perishables.
“I don’t think perishables are handled properly in this country. You buy a gallon of milk, and take it home. Every 10 minutes it takes to get it home, you lose a gallon of shelf life. We will keep it in refrigeration at 33 degrees until we hand it to you.
“We were building a facility to facilitate proper handling of perishables, but since I’ve heard all this about VAT, I’ve put that on hold,” he added.
“We were in the process of drawing the plans as we speak. We’re going to do the floor plans and hold it there, and see what comes of it.”
Mr Roberts said that at an existing 105,000 square feet, Super Value’s Carmichael Road warehouse was already one of the largest on the island. The proposed expansion would represent a roughly 10 per cent increase, and with construction costs estimated at $100 per square foot, this would be equivalent to a $1 million investment.
And, more importantly, with job creation so important, Mr Roberts said the need to constantly supply his 13 Super Value and Quality Supermarket stores would have created employment for inventory checkers and forklift drivers. He did not specify how many new jobs would be created, but this comes in the same week that the unemployment rate increased 2.2 percentage points to 16.2 per cent.
“We’re in the planning stages, and this VAT is coming along at the wrong time,” Mr Roberts told Tribune Business. “It’s causing anybody, and I’ve heard of a lot of people with plans, to put them on hold.
“That’s the wrong thing for the economy and country at this time. This is when we need confidence to forge ahead.”
While having read the Government’s ‘White Paper on Tax Reform’, Mr Roberts said he had also spent time researching VAT’s impact on other countries.
“What’s coming from the other countries, it’s terrifying,” he told Tribune Business. “It’s very, very expensive and complicated to operate, and in some countries it increased the cost of living by as much as 17 per cent.
“It did say that in St Lucia, a basket of groceries that cost $1 before VAT cost $117 after. Therefore, $1 was worth $0.83 in St Lucia. It’s a very cumbersome and difficult tax.”
Suggesting that the administrative/compliance burden imposed by VAT would increase costs for both the Government and private sector, Mr Roberts added his voice to those of noted economist, Ralph Massey, and Fred Albury, the Bahamas Motor Dealers Association’s (BMDA) president, who have both called for the Bahamas to adopt a sales tax as its main reform.
“I don’t see the necessity of it,” the Super Value owner said of VAT. “Leave us with a straight sales tax. It sounds like a madman invented VAT. It has created the biggest uproar I’ve seen in this country, and I hear things I don’t like.
“This is not the time to put a black cloud before us. The Government and the private sector should work this one out together. My personal belief is if they need more money, got to a sales tax.
“It’s a very simple thing. At the cash register scan, put a percentage on everything put through, be accountable for remitting it to the Government monthly, and if not, your Business Licence gets pulled. It seems to me that’s a very controllable and easily administered system.”
The Government has previously said it opted for VAT, rather than a sales tax, because the latter has a ‘cascading’ effect where tax is paid upon tax at each stage of the production process/value chain. VAT, by contrast, taxes only the ‘value added’ at each stage.
The ‘White Paper’ also said a sales tax was prone to higher levels of evasion, but Mr Roberts suggested the Bahamas impose one at 5 per cent with corresponding reductions in Customs duties.
While acknowledging that the Government needed revenues to provide essential public services, the Super Value owner said: “I hope they [the Government] see the folly of their ways and back off. If 100 per cent of the country if against it, merchants and consumers, they will have to back off and think again.
“We don’t want to see any tax monies wasted. We want it well used. The private sector cannot withstand, the country cannot withstand, any more taxes. Our Business Licence is $1 million now, and is going up to $3 million next year whether we make a profit or not. Now they came with another tax.”
With little information coming from the Government, Mr Roberts said Bahamian businesses were reduced to doing their own research. He added that in Barbados “certain merchants went out of business” because that nation’s government failed to provide VAT ‘input refunds’ at all, or on a timely basis.
The Super Value owner said the private sector needed at least a year to implement VAT, and the Government four to five years. This, he suggested, would take it beyond the next election cycle, and it would “never see the halls of Parliament again”.
That may be wishful thinking, given the Government’s determination to implement a VAT come July 1, 2014. Still, Mr Roberts said: “As far as I’m concerned, this has already backfired.
“It’s our government, and we’ll help them out of it if we can, but we’re not going to let them introduce more pain and suffering on the people. They cannot afford groceries now.”
Many ‘breadbasket ‘ groceries are likely to be treated as VAT ‘exempt’, meaning the proposed 15 per cent levy will never be applied to them. This is designed to protect poor, low income Bahamians from the worst effect of the inflation/living standards decrease the new tax will impose.
“Government should never put business in limbo,” Mr Roberts told Tribune Business. “The trouble is they don’t know what they’re doing on VAT. It appears they’re building it as they go. They’re trying to draw plans for the house, but are giving the impression they’re building it without plans.
“The expensive, cumbersome way it operates may be the biggest problem with it. Those countries that have introduced it are looking to have it repealed, and countries that recently tried to introduce it had to back off and are going to make another attempt.
“The Prime Minister should take things in hand and so something that restores confidence; make a statement. Somebody should step in and kill the uncertainty, because that’s damaging the economy.”
The Government has indicated that the VAT legislation, and accompanying regulations and the Tariff Schedule, will be released for public consultation within the next two weeks.
However, Mr Roberts said the Progressive Liberal Party’s (PLP) credibility was in question after it failed to follow through on promises made while in Opposition to re-route traffic direction on Blue Hill Road and Market Streets.
“The PLP members marched with us on Blue Hill Road, prayed with us in Rawson Square, but have been in power for two years and done nothing,”
Mr Roberts told Tribune Business. “It’s a credibility problem. Do we believe anything they say and print? They leave you high and dry.”
Comments
ohdrap4 11 years, 1 month ago
The prices at Super Value are out of control 8 months before VAT comes into play.
The other day I overheard a customer complain that a beverage bottle had been increased to $5.99 from 4.29 the week before.
A 16 oz greek yogurt package which costs $3.99 at solomon's costs $6.99 over there.
A kitchen sieve which retails for $6,49 at Kelly's costs $13.99 at supervalue winton, same size. A kitchen thermometer that cost ten dollars and some change at Kelly's, costs fourteen something at supervalue.
There are more and more items which are cheaper to buy online, pay a courier and customs duty.
I have found tho that lowe's pharmacy has a consistent and fair pricing policy, because my consultations at amazon always result in my buying locally. Same has happened with household items that are subject to 45% duty, i buy them at Kelly's rather than amazon.
ohdrap4 11 years, 1 month ago
But I say that to say this: VAT results in lower gross profit margins, so a business owner would prefer a sales tax.
But to add a sales tax with no reduction in duties is highway robbery. Plus, online purchases would not be subject to sales tax, the courier did not sell me that and amazon does not pay sales tax in the Bahamas. As it is Online purchases would be subject to VAT.
I have a feeling VAT, minimizes fraud. Sales tax is easier to evade, and sometimes when purchasing in Florida we can even write it off since the product will be exported.
John 11 years, 1 month ago
Does hair dye do something to common sense? Heard the prime minister today at the signing of the heads of agreement in San Salvador. And he is suggesting that there be re-enactments of slavery on that island for the guests. A multimillion dollar resort is being built and the part offered to Bahamians is to re- enact a part in their history that was so brutal and degrading, and atrocious, genocidal even, it almost wiped them out, "no massa, we ain't doing it!" Go get your foreign investor to pretend to be a slave! Then help us get some reparation money so we can build and own the next resort to open in San Salvador..and you should see the smirk on his face when he announced it!
banker 11 years, 1 month ago
WTF? He has totally lost it. He signs all of these heads of agreements that gives free land to developers (anyone remember his pronouncement on how Ginn would revitalise Freeport), and it all goes to hell in a hand cart.
ohdrap4 11 years, 1 month ago
You don't have to do it, they will give 400 work permits for the slaves.
banker 11 years, 1 month ago
This is serious stuff. Rupert Roberts is a canny marketer. He knows how to get the last dollar out of Bahamians, with minimal investment. His stores always look tired.
But the bad news is that when Super Value is down 10 percent, that is a serious indicator and economic bellwether of a continued downturn. Typically the average household spends 15 percent of their income on food. If the grocery industry is down ten percent, it means that the average disposable income has decreased. Poverty on large scale is just around the corner. With the rises in poverty comes an increase in crime, a decrease in education and a downward spiral of the quality of life.
The poor Bahamaland can't take much more mismanagement, and yet that is all that there is on the horizon.
john33xyz 11 years, 1 month ago
This is what former Immigration Minister Roker warned us about. But did we listen? No..... Did we put a radar on Inagua to monitor the south seas? No...... Should we be surprised the country is going to ..... ? No......
B_I_D___ 11 years, 1 month ago
It's not just Super Value...even your big discount style shops are down, like Phil's, Phoenix and others. This is way bigger than just Super Value...and the government is clueless!! THe delay tactics are an attempt to shorten the amount of time people will be able to assess and EDUCATE the people as to exactly what this VAT will do for the end consumer. They are spinning things like mad, keeping info closely guarded, so they can spring it at the last moment before people really REALLY learn about it. Walk into any shop or business and ask the average employee what they know about VAT. All they say is...it doesn't effect me, it just effects the big rich businesses...and there in lies the problem. They don't have the education or where withall to fully understand the knock on effect of this. The big businesses that have to enforce the VAT (because government will not collect the existing taxes or revenue) will pass on ALL those fees to teh consumer...the average Joe that is taking home minimum wage. Wake up people. This government is not looking after the little guy having trouble making ends meet.
ohdrap4 11 years, 1 month ago
http://bahamasuncensored.com/#SWITCHING">http://bahamasuncensored.com/#SWITCHING
this is a quote from this week's Bahamas uncensored.com:
B_I_D___ 11 years, 1 month ago
LOL @ Rory...it would be funny if we were IN a first world country that has the infrastructure in place and technology in place to deal with these things...but we don't. Customs has been fighting with e-business for a couple years now and still have not completely figured it out...it takes almost double the time for electronic customs filing then handing in the paperwork...that's if all the systems are up and running. But we are not in a first country and in under a year now, businesses are expected to be up to par...with the technology that the government itself has not even got the systems in place for to handle. It is a spin because of the pure corruption in the existing taxes and dodging of taxes that this new tax is even being discussed.
B_I_D___ 11 years, 1 month ago
Also...last time I checked, that nice system they put in place at the passport office, to pre-file all your applications and schedule an appointment...that's gone now...back to the dark ages.
ohdrap4 11 years, 1 month ago
I remember when they put a computer at the police certificate area. Apply for your police certificate, and, when it is ready, we will email you. lol
the computer terminal is long gone.
These online things can be a mess, including visa appliaction for Canada and US.
VDSheep 11 years, 1 month ago
When we find out who is controlling our politicians - most likely the same majority shareholders of Bahamas Central Bank. They would be the puppet masters of this VAT policy. Here is a quote by Professor Carroll Quigley:
“The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. Each Central bank sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.”
John 11 years, 1 month ago
Well at least ALL y'all Bahamians, black and white, bond and free, high or drunk, y"all get an early warning...don't overdo it this Christmas!!! especially if you gat mortgage or school fees in January..tings ain't tings this Chrismas (again)
B_I_D___ 11 years, 1 month ago
Sadly john...every penny of the Christmas bonus we will give our staff will go 100% to buying crap for Christmas...99.999999999% will not go towards an outstanding utility bill or debt...and a couple weeks into January they are all going to come crying for a staff loan to turn their lights back on or pay school fees...
SP 11 years, 1 month ago
Perhaps Government should be made accountable enough to show us one (1) country in the region that had a margin of success after implementing a VAT taxation system.
If Government is unable to prove without doubt (with examples) that their VAT idea makes sense then the plan must be scrapped....Simple!
Sales or Income tax would probably be the easiest to implement. However, my guess is Government is reserving both for later introduction shortly after VAT.
The country has been badly mismanaged for 40 years, especially more so during the last 20 years with no end in sight as the PLP and FNM are six of one, half dozen of the other totaling the "sunshine boys" no matter how the dice fall.
B_I_D___ 11 years, 1 month ago
The kicker is that in most countries, VAT keeps going up and up!! Italy is now up to 22%, Denmark went from 9% and over the years kept raising it and raising it and it is now 25%!! Once it is in place, you KNOW the government is going to ratchet that thing higher and higher and abuse it.
lazybor 11 years, 1 month ago
sad but true
http://tinyurl.com/c7l9ck6" width="1">
proudloudandfnm 11 years, 1 month ago
Prices have already gone up thanks to the new 1% processing fee and the new customs fees. Add VAT to that and we are dead...
banker 11 years, 1 month ago
No one caught this? Fweddie thinks that this isn't a democracy and Bahamians are too stupid to be consulted. He will get a surprised when he gets unelected and can't ride the foreign love boats and spicy vaseline.
ohdrap4 11 years, 1 month ago
i read that on sunday. sadly, i think that is the opinion of many in govt.
PercentieL 11 years, 1 month ago
Mr. Roberts can easily cover most of SV's increased costs by squeezing out the gross inefficiencies in his operations. SV's products are priced relatively high to cover those inefficiencies. Perhaps we need another major competitor. Anyone miss pre-Sands/Farrington/Barbados City Markets?
ThisIsOurs 11 years, 1 month ago
Yes. I watched SV prices go up almost immediately after the City Market collapse. Had nothing to do with the acquisition just a realization that they had a monopoly. Good business? The prices are crazy, God only knows what price hikes they will implement "in the name of" increased taxes if VAT is implemented. A 4roll pack of toilet paper is now $2 dollars higher in less than ~1yr, a single pack! How is that possible? Don't complain when everyone starts shopping in Florida
bismark 11 years, 1 month ago
we want to tax?start with the rich of society,they make all of the money so they should pay more,why is the average citizen paying the same as everybodyelse?it is not fair,anyone making over 40000 per annum ,income tax should be automatic,alot of people in this country making a very good salary and they are the ones who don't pay their taxes,i am sure if you check the records down at the ministry of finance half of the people who have the big time properties don't pay real property tax,but the govt.wants the average home owner with a modest home over 250ooo to pay?The divide between rich and poor is developing at a higher rate than anticipated and both govts are to blame,lawyers don't have a clue on how to run a country,as far as I am concerned our previous and former administrations were to lazy to look into sustainable industries for our country,they all want to take the lazy way out Tourism,other countries are offering the same at a lower price,we are out priced and the service is terrible,why do we have to build another hotel when we cant fill the ones we have now?
B_I_D___ 11 years, 1 month ago
Hey...I'm paying my tax...trust me. falling into the wealthier aspect of things...when I go and import a luxury car for myself or family, and I am paying over 30-40,000 in duty...I'm paying my taxes dang it!! I'm also running my business honestly, using the proper duty brackets, using the REAL manufacturers invoice, not some falsified invoice trying to be passed through an obscure duty rate and sneak it through customs...that's if you even clear the shipment properly through customs and declare it.
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