By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
A leading distributor has voiced its support for Value-Added Tax (VAT) exclusive pricing as “definitely the way the Bahamas should go”, adding that this would attract customers and avoid unnecessary business disruption.
Jason Watson, vice-president of operations at Automotive Industrial Distributors (AID), told Tribune Business: “Exclusive pricing is definitely the way the Bahamas should go for attracting customers and avoiding major/unnecessary costs and disruptions to our businesses.
“AID alone has hundreds of thousands of labels on our retail floors, and hundreds of thousands more units in our warehouses that were priced by the manufacturers, so it’s a daunting task which will greatly undermine our operations.
“Obviously, there will be a long period when the same item may have two different prices, and this will cause confusion among consumers as well as our own staff. It will also take us much longer to get products from the warehouse to the retail floor, which will adversely affect our customer service levels.”
Mr Watson added: “Every retail organisation has voiced the opinion that we should use exclusive pricing, but instead the Ministry of Finance has decided to take the advice of foreigners with no retail experience over Bahamians with intimate knowledge of this consumer market.
“This is a classic example of taxation without representation, and another poor choice by the Ministry of Finance that undermines our economic prosperity. I am still hoping that the Ministry of Finance will look at this issue objectively even after VAT implementation, and make the clear choice for exclusive pricing.”
The Bahamas Federation of Retailers has long voiced opposition to VAT inclusive pricing, noting that the Government’s insistence on this imposes “a massive administrative cost on businesses, as everything in the country will need to be re-priced, re-ticketed, reprinted or relabeled”.
Mr Watson, like the BFR, took exception to comments by New Zealand VAT expert Dr Don Brash, who described repricing as a one-off cost and no big deal.
Mr Watson said those remarks were irresponsible and misleading to the public. “We all have the firm understanding that the VAT rate will be changed, as the Ministry of Finance has outlined, and that means that every time they change the rate we will have to mass change labels and service levels again will drop,” he explained.
“It is unfortunate that the lead consultant seems to be unaware of that fact. He is also unaware of the major effect that the US has on our consumer market. From his statements I could tell that he has no appreciation for our retail environment.”
Comments
chairarranger 9 years, 10 months ago
Don Brash was a world-leading central bank governor for fourteen years. I just read about him in the New York Times: http://mobile.nytimes.com/2014/12/21/up…
It is inconceivable that in targeting inflation, setting interest rates and managing a nation's money supply, that he would not have an "appreciation for our retail environment" and an acute understanding of how best to implement a tax system that he was at the forefront of implementing in his own country.
Brash would know a lot more than Jason Watson about tax, pricing transparency and consumer protection. Rather than whinge in his own self interest to save the cost of a hundred thousand pricing stickers, Mr Watson should show support for transparency in pricing and ensure local consumers are not confused or misled about the final cost of his products.
ohdrap4 9 years, 10 months ago
appeal to authority is not a good argument.
also rememeber, merchants can choose inclusive or exclusive pricing in new zealand, so should we be able too.
chairarranger 9 years, 10 months ago
Experience not authority. The Bahamas is not the first place on the planet to impose a VAT.
chairarranger 9 years, 10 months ago
The government is legitimately elected. The VAT is here. This is not a fresh debate about the merits of the VAT, its about the mechanics of implementation. Bahamian shoppers (and tourists) don't need tricky schemes by retailers to ticket-price goods with a number that is less than what they will be asked for from their wallets at the checkout. The "hot air ignorance" is in fact your rant against the VAT and that debate has been lost, and if you want a fresh debate then take it elsewhere, (like to an Election). In the meantime price your goods with the price you will charge me when I go to pay for it. Bahamians don't want to carry around calculators in their pockets everytime they go shopping in your store.
chairarranger 9 years, 10 months ago
I didn't vote for this government, nor have I ever worked for them or for any agency associated with them. Instead of misdirected name-calling go find yourself an intelligent argument instead. One that relates to the facts of the current situation. It is misdirected ranting, name-calling, a lack of efficient, consistent and transparent policy implementation, and a failure to stick to the facts that sees us now with a $6 billion national deficit that has to be funded somehow. If tricky and deceptive retail pricetags is your answer to fixing the economy then I am very grateful that you and Mr Watson are not running things.
chairarranger 9 years, 10 months ago
It is you who needs a course in basic economics to better understand the difference between a sales tax (which is what the US has, varying in rates from state to state) and a Value Added Tax (which we have, New Zealand and Australia has, and most of Europe has, levied nationally at the same rate). Sales tax is customarily priced on the shelf exclusive of the tax. The tax burden falls wholly on the end purchaser. A VAT is customarily priced on the shelf inclusive of the tax. The tax burden falls across each stage/participant in the production and eventual sale process. It is tricky and deceptive to attempt to use sales tax labelling conventions in a VAT environment, and any retailer with half a brain knows this. Evidently not you or Jason Watson, however. If we want to draw comparisons with US shelf pricing then we need to have the same tax system. We do not. This debate is about the mechanics of implementation. Consumers should not be required to undertake mental arithmetic or carry a calculator wherever and whenever they shop. Perhaps educate yourself before spraying insults at others when your basic argument fails.
chairarranger 9 years, 10 months ago
You can fool some of the people some of the time. You cannot fool all of the people all of the time. Even with your sanctimonious ranting. There is nothing "competitive" about hiding the full cost to consumers (all of whom are now well aware of the existence of the VAT and can see it on their receipt) on a price tag that deliberately understates the amount I will be asked for from my wallet at the checkout. Retailers who think this is "competitive" or good business practice don't deserve to be in business. Judging by your ill-informed understanding of tax policy implementation and your rabid defence of a retail pricing system that serves purely to deliberately understate the final cost of goods produced as part of an incrementally taxed production chain, consumers won't have to endure your business for very much longer as VAT inclusive pricing takes full effect here. Good luck on your move to Canada.
chairarranger 9 years, 10 months ago
And back to the name-calling and revolutionary soapbox we go. For someone who quotes Wikipedia as their source for research (and who subsequently claims the most heavily indebted nation in the western world to be the most successful economy) it is a bit rich for you to call anyone on earth an "economic novice".
The answer to your question has already been given. Do some homework on the difference between a sales tax and a value added tax. They are not the same thing despite your obvious blind spot. The USA has a sales tax, variable from state to state. Canada has a value added tax plus a variable provincial sales tax, and in some cases a harmonized (combined) consumption tax of varying rate and reach depending on the province.
Then there is us. Spot the difference. We have a value added tax, no variation, consistently applied at one rate across one nation. Our tax is like Britain, most of Europe, Australia and New Zealand. Our tax is not like the USA or Canada. Our tax is - repeat - a value added tax.
So go buy the new labels, re-price your car parts correctly and with integrity, and quit dreaming that you can claim to be "competitive" simply by advertising prices that are less than the prices your customers end up paying when they walk up to your cash register and open their wallets. Its deceptive, lazy, misleading and wrong. And that's why inclusive pricing is here now, (like other countries with one single, non-variable, consistently-applied value-added consumption tax), and its here to stay.
chairarranger 9 years, 10 months ago
It is good that you have nothing more to say on the matter, because almost everything you have said to this point bears almost no resemblance to tax policy implementation. Instead you have embarked on a predictably cantankerous rant against the politics of a government you clearly do not like, replete with personal attacks and name-calling against those with a counter view (and a less self-interested view) than you, and with whom you find it difficult to mount your own argument that is based on facts and proper research and an understanding of the difference between two very basic variants of consumption tax. Just like Jason Watson.
There is nothing particularly unique about the tax that we've had imposed on us here, its not something different or unusual, and nor are our consumers or tourists particularly unique or special when it comes to their behavior. Aside from your slightly unhinged level of rage, and your desire to instruct and bark orders and insults at others, what is most unusual is that in this debate organizations like AID have such a poor grasp of tax policy mechanics and the basic difference between a sales tax and a value added tax. That poor understanding extends, in all its clear and unvarnished magnificence evidenced by your contributions to this comments thread, to you.
chairarranger 9 years, 10 months ago
You are repeating yourself. For someone who has "nothing more to say on the matter" you are about as consistent as your argument: not very. I have addressed your factual errors by repeating myself, for your exclusive benefit, in the comment thread below.
chairarranger 9 years, 10 months ago
I've replied to the substance of your comments in the thread below. As for the rest of your ongoing commentary on domestic politics, the government and your assessment of its performance, and your views and allegations about how it operates, this has no particular bearing on the very specific topic of inclusive/exclusive pricing which is what this article was and is about. For this reason I haven't shared my own views, commentary and insight on these topics, which might in fact surprise you. Commentary and opining about the state of the government might be useful for the press releases, newsletters and speeches to the membership but it is not relevant at all to a narrow discussion about the mechanics of efficient consumption tax policy implementation.
I have similarly disregarded your insults and personal attacks in this comments thread to date, but I am happy to raise them with you in a open public forum, where you can tell me to my face that I am thick, an ignorant government stooge of the highest order who speaks utter nonsense, who knows nothing about running a business in the Bahamas, a preacher of hot air ignorance, in need of having my head checked, an idiot, a complete idiot, a moron, a flag waving simpleton, an economic novice, really thick, imbecilic, pathetic, small brained, a die hard moronic PLP, a government minded drone, asleep, stupid, a fool with a puny brain, and other such insults which you apparently think are ok, under a cloak of assumed anonymity, to hurl at people who offer reasoned alternative viewpoints on matters of policy in which you have a very clear, personal, vested interest. We'll then see how each of your unfounded accusations against me stack up.
Such big talk. I certainly hope you can walk it when the time comes.
The_Oracle 9 years, 10 months ago
What Don Brash probably does not appreciate is the standard level of incompetence in Government, and the general lack of record keeping and cost accounting in the Bahamas. Considering that Sale tax in the U.S. is not labeled at all, but all Bahamians know it is there and accept it, the same should hold true here, but for the purposes of Consumer education it should be a separate figure on labels so the consumer can see item by item what the shops price is, and what the Tax adds. This will save consumer affairs much time in investigating complaints, being able to go directly to the shelf with the complainants receipt, rather than go inspecting company records they cannot understand anyway! This will also help sales clerks to explain this to consumers, as consumer ignorance will produce the most complaints. There is an educational opportunity here the Government either does not care about or cannot fathom, and it is probably both. The Shops aught to augment their labels to save their staff the grief! Comply and go beyond what is required. Government never does, rise above them!
happyfly 9 years, 10 months ago
What none of you get is that the entire reason for inclusive pricing is to steer public anger of increased costs toward the vendors and away from the government.
There is absolutely no other reason. Most Bahamian POS systems were built for the US market where a simple click of the button allows for the introduction of an exclusive end point tax that can issue a detailed tax report at the end of each day. To make it compulsory to be inclusive is an unnecessary burden on the vendors and nothing short of an outrageous PR stunt.
chairarranger 9 years, 10 months ago
I get it, but its not the reason. Its a consequence.
The "anger" is debatable - everybody knows the VAT was coming and has arrived and there has been no mass domestic collapse or civil disobedience. Resistance, sure, but with organizations like AID still stuck back on the inclusive/exclusive debate, which had already been decided the moment it became a value added tax and not a sales tax, and a few paternalistic grumpy old folk spraying personal insults in online comments threads, there is not much for the government bureaucrats to worry themselves about insofar as general acceptance of the tax is concerned.
In the words of one large retailer quoted here in the Trib a couple of days ago "the sky is not falling" as a result of the VAT's introduction.
The most effective tax policy is one that is implemented the most efficiently for the purposes of the collector (government). It is most efficient for government to seamlessly integrate a consumption tax into the price of goods and services at each stage of the process where value is added, with as little ongoing fuss as possible. Yes that helps with their PR too, obviously. But primarily inclusive pricing is in the interests of the government from an efficiency standpoint. This is a tax for government. Its not a tax for business. So its about what the collector wants not what the payer prefers. That is government, people. Revenue collection is not a taxpayer driven system and people with a business mind should surely understand that, with detachment instead of emotion. Similar to when a private sector landlord collects rent he or she seeks payment in the form that best suits him or her. Not the form of payment that the tenant ideally would prefer or using the system the tenant finds works best for them.
And to leave no doubt as to what customers, at each stage, pay in tax to government, the receipt shows VAT as a clear line item. Its on the receipt because there is no way possible to receive goods or services without the VAT having been paid, and having been added at each step in the production chain. Not added later like a sales tax is, burdened solely on the final end purchaser, (as is the case in the USA and in all provinces of Canada too).
Our VAT is not an "end point tax" (which is the premise of your whole argument). Were it an end point sales tax then this would be a valid debate, but its not.
chairarranger 9 years, 10 months ago
It is little wonder the government has had to implement a VAT when the level of economic understanding in the business community and its representative organizations is so rudimentary that we have to read comments like yours. The country is in debt due to ignorance, shouting in the face of reason, self interested individuals, and a failure to accept reality. You pontificate and yell, selectively quote and then misquote, but you seemingly never read or listen. To repeat my earlier comments in the previous thread:
You don't like it, but its fact. Its also the reason you need to re-price your car parts and your homewares by the end of February, which is fast approaching.
As previously pointed out to you, I don't work for the government, or any agency of the government, and no amount of sticking your fingers in your ears and shouting while simultaneously burying your head in the sand will make you correct when you are, on almost all counts, entirely wrong.
chairarranger 9 years, 10 months ago
Three "average Bahamian" you talk of, when presented with the reality of a VAT. http://www.thenassauguardian.com/news/5…
In a few weeks time, thanks to inclusive pricing, they won't need to carry pocket calculators when shopping or use their mobile phones standing at the shelves to calculate what their items of food will actually cost them when they head to the checkout. Its called progress :-)
chairarranger 9 years, 10 months ago
Clever enough to know that a Tommy Hilfiger shirt sold in Florida, for example, will have a 'tax exclusive' price tag, with the US sales tax levied only at the point of final purchase. But the same Tommy Hilfiger shirt bought at, lets say, Marathon Mall will instead have a 'VAT inclusive' price tag, with the Bahamian value added tax having been added at all the points of landed transfer, through each stage of production, to final consumption.
Incidentally, the BFR "co-chair" makes some good and valid points from time-to-time...
http://www.thenassauguardian.com/bahama…
...except when it comes to the mechanics of VAT pricing. The bellicose often get ignored, as do name callers and those who play the politics of personal attack. Perhaps a more 'softly softly' approach would serve BFR members much better in the longer term than simply 'firing things off' at people who might hold a counterview? Much like contributors to comments threads such as this one.
chairarranger 9 years, 10 months ago
What part of
suggests to you that I am not "admitting" Canada has a VAT? This is the fourth time I have clearly stated they have a VAT.
For the fifth time: Canada has a VAT plus sales taxes (of many different rates depending on the province) levied on the same products/services, with a vast number of exempted products that are not taxed at all = a multitude of rates, wide variation, inconsistently applied, many variations.
We have a VAT only and no sales tax = a single rate, no variation, consistently applied, no exemptions, no provincial differences. Extremely straightforward.
And this is - if you take the time to read the literature (as some who have an interest in operating successful retail businesses that are not in a constant state of clash with bureaucracy have done) - precisely why inclusive pricing has been mandated. Because it is one rate, it is not variable based on product/service type or region, and it is consistently applied to every product/service in the market.
If we had sales taxes on top of the VAT, and variations and wide ranging exemptions too, you might pull together a shred of a cohesive argument that, like Canada, it may be more efficient for the retailer to calculate all taxes (excluding exempted products) together at the cash register. But we do not. And so its not more efficient to have exclusive pricing, and so inclusive pricing is being adopted like every other country that has a VAT only, of a single rate, with no variation, consistently applied, no exemptions. You keep asking me if I "get it", well, do you get that?
Again I repeat: Our tax is like Britain, most of Europe, Australia and New Zealand. Our tax is not like the USA or Canada. It has got nothing to do with the familiarity of consumers to other systems, target market mobility, product or price interchangeability, ease for the retailer, or any other variable you seem intent on adding to the mix to cloud the basis for which tax inclusive pricing has been mandated here. And that basis is efficient tax collection. Efficient for the revenue recipient (government).
Tax is for the benefit of government. Tax is not for the benefit of business or consumers. We may not like it but this is what a "tax" is. Even a freshman economics student know this and has the objectivity to recognize it.
chairarranger 9 years, 10 months ago
Once again:
Once again:
Once again:
This is why inclusive pricing is mandated here but not in Canada. But if you want a new sales tax added on top of the existing VAT here then by all means lobby the government for one, even vary the rate between islands if you want added complexity, and completely exempt a few product or service groups, and then you'll have a consumption tax system equivalent to Canada (a VAT plus a variable sales tax, with a range of items exempted from one or both taxes). You may strengthen your argument very marginally for exclusive pricing, but you will have great trouble explaining that to the BFR members and fashionista customers.
chairarranger 9 years, 9 months ago
No, you simply transition all of your pricetags by Feb 28 to ones that transparently state, in the spirit of full compliance:
"Price: $129.00 (includes VAT of $9.00)"
chairarranger 9 years, 9 months ago
What, like... Panama, Argentina, Barbados, Guatemala, Venezuela, Brazil, Mexico, Ecuador, Chile, Colombia, El Salvador, Peru, Paraguay, Guyana, Uruguay... for example? All with VAT. All with retailers happily using a VAT-inclusive pricing model.
asiseeit 9 years, 10 months ago
However Vat is displayed and collected does not matter in the least as the money will still be wasted, mismanaged, and outright stolen. The Bahamian people will still be kept in the dark by a self serving, inept, and corrupt government with no reduction of our debt. The Government of The Bahamas is a total and complete failure. We are just another failed ex-colony that has proven unable to govern ourselves in a manner that propels the country and it's people in a fair, honest, and uplifting manner for all.
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