The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

BAY Street merchants yesterday voiced concerns that the imposition of Value-Added Tax (VAT) on “duty free merchandise” would not only affect their competitiveness but discourage local purchases as well.

This comes after the Ministry of Finance’s financial secretary, John Rolle, recently told Tribune Business that the Government was is in talks with duty-free retailers over a system that would refund tourists their 15 per cent VAT payment.

Mr Rolle said the Government was looking to avoid revenue leakage while also preserving the duty-free retail, and tourism, industries’ competitiveness.

But Marcie Tannous, manager at the Perfume Shop, told Tribune Business VAT would likely have a greater impact on the local shoppers she was seeking to attract.

“People come here on the cruise and come from the hotels to downtown to purchase duty free goods,” she said.

“My goals were to build a beautiful store that locals would feel comfortable coming to. We all rely on the tourists, of course, but I want the locals to come and feel that this is their home store.”

She added: “We’re particularly hurt because now the cruise lines, instead of just making their money off the cruise, now they’re stocking perfumes and make-up, too.

“Why is someone going to come in and purchase make-up from me and carry it around all day when they can purchase it on the ship and leave it in their room?”

An executive at a large Bay Street luxury goods retailer told Tribune Business that while the local consumer market was somewhat seasonal, it was the tourists who help drive business year-round.

They told Tribune Business: “Us having a duty free port means that we have the best pricing. If we put a tax on top of that, then where is our completive edge?

“Margins in the luxury retail market are already very small. It’s a very aggressive game, and adding a tax to those items puts us in some very rough waters. Bay Street as a whole is changing. It changed with Atlantis and it will change with Baha Mar. Our piece of the pie is getting smaller. Where are we going to be in five years?

“In terms of local shoppers on Bay Street, that’s very seasonal. The tourists, however, help to sustain our business year round. If the local customer has less money to spend, we’re going to feel that, particularly at Christmas time, which is the ultimate shopping season. Christmas is the icing on the cake. People are already being even more frugal.”

Explaining the duty free refund system earlier this week, Mr Rolle said: “We’re having conversations with the Duty Free Merchants Association on how the system would function. It’s very important that whatever we do there isn’t any leakage of revenue, as well as making sure it’s super convenient for the tourist.

“The way it would work is that if a tourist makes a purchase, and they’re taking the goods outside the country, if you pay VAT on it they present their receipt and they get you a refund as you’re leaving the country.”

He added: “That is how it would work for a tourist. It is not something that residents can have access to. Bay Street merchants have expressed particular concern that applying VAT to duty free shopping items would hurt their ability to make sales and reduce business competitiveness.”