The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday warned it will ignite “a real war” should it insist that ‘inclusive pricing’ be maintained following an increase in the Value-Added Tax (VAT) rate.

Philip Beneby, the Retail Grocers Association’s (RGA) president, told Tribune Business that merchants would refuse to go through the numerous - and costly - changes they had to make in accommodating 7.5 per cent VAT all over again.

The Bahamian retail industry is continuing to lobby for a shift to ‘exclusive’ pricing despite VAT having already been implemented, although the Christie administration has shown little sign of altering its ‘inclusive’ insistence.

“I haven’t heard anything else on it. It’s still where it was last time,” Mr Beneby said yesterday of the ‘exclusive’ versus ‘inclusive’ pricing debate.

“We just have to keep agitating and see what happens. Maybe one morning someone will wake up and decide it’s best to do exclusive rather than inclusive pricing.”

The private sector’s preferred method would see products on store shelves priced without VAT, with the 7.5 per cent tax ‘broken out’ on the register tape and sales receipt handed to consumers at the Point of Sale (PoS). The Government, though, wants the VAT to be included in all forms of pricing within retail stores.

“I’m just waiting to see what they’re going to say when the Government decides to increase the VAT rate,” Mr Beneby told Tribune Business.

“I think it will be a real war again if businesses have to go through the same processes and procedures they went through with inclusive.

“If they make industry go through the same processes again, it will be war. If the rate is increased, they have to go exclusive. That’s where the problems are going to come in. Whenever the rate is increased, they’re going to have to go exclusive; there’s no other way.”

Many observers believe that it is only a matter of time before the Government raises the 7.5 per cent VAT rate, the only questions being how quickly and to what extent.

The Bahamas’ trade commitments, already set under the Economic Partnership Agreement (EPA), and upcoming with the World Trade Organisation (WTO) accession, will require the reduction/elimination of numerous import tariffs.

The Government will thus need to find replacement revenue, and VAT - and an increase in its rate - remains the likeliest option.

Meanwhile, the VAT ‘exclusive’ versus ‘inclusive’ pricing argument remains arguably the biggest unresolved issue relating to the new tax’s implementation.

Gowon Bowe, the Coalition for Responsible Taxation’s chairman, previously told Tribune Business that both sides - government and business - had agreed to ‘make the case’ for their respective positions.

While the Government’s advisers were to produce empirical evidence showing why VAT ‘inclusive’ pricing was the preferred option, the business community is set to do likewise on the ‘exclusive’ option.

Many private sector executives believe the Government has an ulterior motive for insisting on VAT ‘inclusive’ pricing, namely that this will serve to ‘mask’ the 7.5 per cent levy. This, in turn, makes it more likely that consumers will blame the retailers for any price increases, not the Government’s taxes.

The Retail Grocers Association is not they only merchant body to voice its opposition to VAT ‘inclusive’ pricing.

For the Bahamas Federation of Retailers (BFR) previously warned that the Government’s insistence on this method would impose “a massive administrative cost on businesses, as everything in the country will need to be re-priced, re-ticketed, reprinted or relabelled”.

“VAT inclusive pricing will necessitate the re-pricing, relabelling or retagging of millions of items across all of the retail stores and other businesses in the Bahamas,” the Federation said previously.

“From car brochures to menus, from posted service charges at the dentist’s office to clothing, shoes, electronics and car parts, every item or service currently being sold or traded in the Bahamas will have to be re-priced come January 1, as the law is currently written.”

The Federation had also warned that thousands of extra labour hours would be required, with companies having to call in employees during the holiday season to transition to VAT inclusive pricing.

“Essentially, this approach would ensure that the administrative costs of VAT compliance will be incredibly and unnecessarily high,” the Federation said previously

“Many Bahamian businesses don’t have POS systems, so they will have to manually re-price everything.

Mr Beneby, meanwhile, urged the Price Control Commission to not make it seem like it was “demonising business people” when carrying out its inspections.

Calling for these to be done on a “case by case basis”, Mr Beneby also criticised the media circus that seemed to accompany the Commission on every store visit.

“I don’t see the logic in going so public with it,” he added. “If Price Control is doing an inspection, and happens to come across an infraction, take the necessary steps.

“Why make it such a public spectacle? I don’t see the rationale behind it, but maybe others do.”

Mr Beneby said the Government was rarely so public on other matters of national importance.