The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian businesses and consumers may not see the final revised Tariff Schedule until just two months before Value-Added Tax’s (VAT) implementation, a leading supermarket operator yesterday describing the proposed fiscal reforms as “still a nightmare”.

Philip Beneby, head of the Retail Grocers Association, confirmed to Tribune Business that retailers and wholesalers, during a recent meeting with Customs and Ministry of Finance officials, were told that the Tariff Schedule may not be released until as late as two months’ before VAT’s July 1 implementation deadline.

Mr Beneby backed this newspaper’s sources in also confirming that these details were revealed by Simon Wilson, the Ministry of Finance’s deputy financial secretary.

However, John Rolle, the Ministry of Finance’s financial secretary, last night told Tribune Business that his deputy had been referring to the date when the final Tariff Schedule was likely to be released.

He added that a draft Tariff Schedule would be released for public/private sector review much earlier, once it had been seen by the Christie Cabinet -something he said would happen this month.

Mr Beneby, though, said Bahamian retailers and wholesalers would suffer “a serious effect” if they did not have some idea of Customs duty rate changes in advance.

Noting that the Tariff Schedule was key in allowing retailers to adjust both prices and inventory, the Retail Grocers Association chief said: “The Tariff Schedule should have already been out if there were sufficient studies done.

“That just goes to show how slow they’ve been churning out the information, and how much they are ill-prepared and not quite ready to implement VAT. All these things should have been studied and done already.”

Mr Beneby said that with most Bahamian food stores carrying hundreds, if not thousands, of different product lines, the Tariff Schedule was “critical” - especially for heavy importers.

It determined pricing, how food stores are “going to audit their inventory”, and what to cut back on. “For those who are huge importers, they need it to gauge their shipping and cash flow as well,” Mr Beneby said.

As for the industry’s concerns over how the legislation proposed to allow them to recover ‘input’ VAT in proportion to the ‘taxable’ items they sold, Mr Beneby said the Association had received no confirmation the Government will alter its approach.

A meeting between the industry and Ministry of Finance is scheduled for this Friday, with Mr Beneby anticipating this and other VAT-related issues will be discussed further.

“The Government have not met with all the supermarket operators yet, and speaking with them, a lot of them are not clear on anything at this point,” Mr Beneby said.

“The general mood, speaking with all the operators, is they’re not being very receptive to VAT at all, especially in this present form, and the fact it’s a very intense type of taxation that is going to be required.

“It’s not an easy tax to implement, and that’s what a lot of operators are saying. They’re concerned about what it’s going to cost them to implement, as well as administer it. They don’t like it,” the Retail Grocers Association chief added.

“Overall, it’s still a sort of - and I don’t know if I want to say it - a nightmare to a lot of us. Whatever we are hearing about it, it’s not good. We are not hearing anything positive about VAT, and that’s the sad part about it.”

Mr Rolle, though, told Tribune Business that a draft version of the proposed Tariff Schedule would be released well before the final version was published.

“The Tariff Schedule is being provided to the policymakers this month,” he said. “We anticipate that afterwards, that can be circulated in a draft fashion even before they’re finalised. It will happen after the Cabinet sees it at a policy level.”

The Government, in a recent press release, had indicated it would release the Tariff Schedule - the final missing piece of a four-pronged VAT jigsaw - last Friday, January 17.

That, though, has not happened, even though it will accompany the legislation, regulations and economic modelling in enabling businesses to determine how VAT will impact them individually.

As for Mr Wilson’s comments, Mr Rolle said: “That was an estimate in terms of the final schedule, not the draft schedule.”

The Ministry of Finance, he added, had gone through the Tariff Schedule “line by line”, adjusting it in accordance with the general principle that all rates are to be lowered by 17 per cent to compensate for VAT.

“It takes into account that, at the final stage, the Government will have an opportunity to indicate what are the special industries to be treated on an exempt basis,” Mr Rolle told Tribune Business. “There are some industries that will be looked at on that basis.”

Acknowledging that the Bahamas’ offers in the World Trade Organisation (WTO) accession process will also influence the tariff review, Mr Rolle added: “That’s always a consideration because the timeline for WTO is different from the timeline for VAT.

“We’re doing this process in such a way that the consumers get the benefit today, and the Government gets its flexibility to go through the accession process for WTO without any encumbrance.

“There’s no conflict between the two processes, but one has to be sensitive to that in terms of how this exercise is driven.”