The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A leading retailer is blaming Value-Added Tax (VAT) for a 41 per cent drop in the sales growth rate at its Nassau stores, while calling on the Government to extend ‘exclusive’ pricing beyond hotels and dine-in restaurants.

Jason Watson, Automotive Industrial Distributors’ (AID) vice-president of operations, told Tribune Business that while the company has met the VAT ‘inclusive’ pricing requirements, the effort was a “major waste of resources”.

Bahamian merchants had to complete the transition to VAT ‘inclusive’ pricing by Saturday, February 28, and the Government announced over the weekend that their “impressive compliance efforts” meant this deadline would not be extended.

Mr Watson, though, argued that ‘inclusive’ pricing compliance costs would not be a “one off” expense, but would continue to accumulate indefinitely while this is enforced.

He said the VAT ‘exclusive’ pricing policy should be “extended to all business types,” something he described as a more practical option. It is also a reference to the seemingly ‘discriminatory’ pricing treatment the Government is permitting in favour of hotels and sit-in restaurants.

“The pervasive role of government in our economy, and inherent political interference, are undermining our economic development. VAT inclusive pricing and price control are prime examples of policies based on political interests instead of economic principles,” said Mr Watson.

“The negative impact of the VAT tax has already resulted in a 41 per cent dip in AID’s Nassau sales growth rate, and several branch stores have had lower sales this January and February compared to the same periods last year.

“Considering that operating costs have risen dramatically, especially due to the increase in the Business License fee rate, a decline in sales growth is a major concern, especially so soon after VAT’s implementation.”

Super Value’s owner Rupert Roberts last week conceded that merchants had effectively “lost the battle” over Value-Added Tax (VAT) ‘inclusive’ pricing, with the supermarket chain having printed over one million new price tags to meet the Government’s demands.

Mr Roberts estimated that the software required to print the VAT ‘inclusive’ price tags, and the “thousands of man hours” involved in re-pricing store and warehouse inventory, had cost Super Value around $100,000.

Several observers have suggested that the Government has opted for VAT ‘inclusive’ pricing because it will camouflage, or disguise, the 7.5 per cent levy, thus ensuring consumers instead blame Bahamian merchants for any price increases.