The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Furious grocery retailers yesterday blasted the Government for “throwing us under the bus” with misleading statements on Value-Added Tax (VAT), and warned consumers that duty reductions would not lead to blanket food price cuts.

Rupert Roberts, Super Value’s owner, and Philip Beneby, the Retail Grocers Association’s president, told Tribune Business they had calculated that all the import tariff-related “tweaking” would only reduce overall food costs by 0.5 per cent.

And, with many of the duty cuts falling on small, volume, slow moving products, the duo argued that the would do little to minimise 7.5 per cent VAT’s ‘cost of living’ impact - unlike what the Government is suggesting via its representatives and media advertising.

Michael Halkitis, minister of state for finance, was quoted in one newspaper as suggesting that food prices would fall due to corresponding duty rate cuts designed to minimise VAT’s impact - a message that Messrs Beneby and Roberts said would result in “calamity”.

They suggested that Bahamian consumers were being “deceived” to ensure they blamed VAT-induced cost of living increases on the private sector and merchants, not the Government’s new tax regime.

Urging the Christie administration to reverse course in the eight days available to it, Mr Roberts said he would pay to have police officers in all Super Value stores on January 1 to guard against a negative public reaction.

He warned that some Bahamians might refuse to pay VAT on the grounds they have been misled, and added that the ‘inclusive pricing’ issue still had not been settled to private sector satisfaction.

“We have hit the breaking point, the tipping point with these people,” Mr Roberts told Tribune Business, as relations between the Association and the Government appeared to freeze once again.

“They are trying to deceive the public, and will blame the high cost of VAT on us. We’ve heard many representatives from the VAT Unit on the local radio saying they’ve reduced duties by 7.5 per cent to compensate for VAT.

“We want to warn the nation that this is a total deception. Merchants are on board with VAT, but the poor consumers are being deceived,” the Super Value president and owner said.

“The consumers are the ones paying VAT, and they [the Government] have to get them on board; not deceive the public and blame merchants for the increased cost of VAT.

“The truth is that when the public come into the supermarkets in January, the prices will be the same as they are now, and nothing will have gone down. But 7.5 per cent VAT will be added to your bill.”

Mr Roberts’ complaints about misleading government VAT advertising were backed by Mr Beneby, who told Tribune Business: “They’re making these blanket statements, and giving the public the impression there will be a reduction on food items come January 1, when that will not be.

“It gives the public the impression a whole gamut of items has been reduced.”

To minimise VAT’s cost of living impact, the Government has announced numerous import tariff reductions on a variety of products, not just food.

And it has also altered the basis for calculating import tariffs, switching from the catch-all Cost, Insurance Freight (CIF) method to Freight on Board (FOB), a move again designed to lower duty payments and compensate for VAT.

However, the import tariff reductions themselves are far from being comprehensive and across-the-board. And, in the case of the food retail industry, Messrs Roberts and Beneby said the cuts had largely spared the products that generated greatest sales volume.

“The deception is that the Ministry of Finance have tweaked duties on three volume items by 5 per cent. Three volume items can’t bring down the cost of living on 35,000 items,” Messrs Roberts and Beneby charged.

Mr Roberts called on the Government to list the food items subject to import tariff cuts, and say what they had been reduced by. He identified ketchup, macaroni and cream as the three ‘volume sellers’ that will enjoy the 5 per cent cuts.

The Super Value owner emphasised, though, that these and other import duty cuts would not come close to offsetting VAT’s impact.

He described the other reductions as falling largely on “shelf decorations”, items that are considered relative luxuries or are slow moving, bought only once a month or year.

Suggesting that their effect would be relatively meaningless in the grand scheme of things, Mr Roberts told Tribune Business: “In the industry, 20 per cent of items represent 80 per cent of the volume. The majority of the items....., their tweaking does not amount to anything in bringing down the cost of food.

“They also removed the duty on freight. Well, 60 per cent of food store sales are bread basket, which is already duty free. On the other, 40 per cent of items - from 10 per cent duty to 30 per cent duty - it only amounts to minimum deductions of duty, and when you get up to 45 per cent duty there is a savings of 2.67 per cent, which are very slow items.”

Mr Roberts added: “The Retail Grocers Association estimates that the tweaking of duties will only bring down the cost of living by half of one per cent (0.5 per cent), leaving you to pay the increased cost of 7 per cent for VAT.

“It will take approximately three months for the half of 1 per cent to seep through the system. We average six weeks inventory, on which we paid high duty, and prices will be reduced by pennies on the reduced items as we reimport and reprice.”

Warning of the negative consequences if the Government persisted with its advertising message, Mr Roberts said: “I expect that if the Ministry of Finance doesn’t correct their radio communications and tell the public the truth, they are inciting trouble for merchants and themselves.

“It could come down to the public refusing to pay VAT because they have been misled... I’ve been trying to see Minister Halkitis all week, and tell him to tell the truth to avoid calamity.

“Why do they have to go out and throw us under the bus, and say it’s the merchants’ responsibility for stuff going up, when it’s going to be VAT. I have checked all of our wired insurance. I am expecting trouble. I will pay police to be in our stores on January 1.”

Mr Roberts pledged that consumers would be greeted on January 1 by in-store signs making clear that cost of living increases were due to the Government’s new tax, not the private sector.

Messrs Beneby and Roberts added that the Government seemed to have abandoned the private sector, which it seemed to no longer have use for, once it had assisted with modifying its VAT proposal and accepted its implementation.

“We co-operated with them, helped them develop this, and now they throw us under the bus,” Mr Roberts added. “They’ll be back to us, asking us to co-operate. Remember the ‘no’ vote. Don’t trust them.”