The Tribune

By NEIL HARTNELL

and NATARIO MCKENZIE

Tribune Business Reporters

AML Foods chief executive yesterday apologised to Freeport consumers for "any distress caused" after provider error resulted in store receipts showing a 12 percent VAT two days early.

Gavin Watchorn explained to Tribune Business that the mistake resulted from a third-party provider uploading the "amended receipt" for the increased VAT rate too soon.

He added that this resulted in no loss to customers, as they were charged the now-expired 7.5 percent VAT rate rather than the 12 percent shown on the receipt.

"We had a bit of an issue in Freeport, where the provider uploaded the amended receipt early," Mr Watchorn said. "While it was billed at 12 percent, the VAT charged was still at 7.5 percent.

"It was corrected on Friday evening. The wording was 12 percent, the calculation was 7.5 percent. I apologise for any distress it may have caused, but once we saw it it was very quickly corrected."

Claims that AML Foods' Freeport stores were charging 12 percent VAT before the July 1 implementation date were circulated widely on social media, with some shoppers even displaying their receipts as evidence for the world to see.

One, who had shopped at Solomon's Lucaya at 6.14pm on Friday, wrote: "Solomon's Lucaya already charging 12 percent VAT and today is June 29, 2018. I got do right in."

Mr Watchorn said that apart from the Freeport receipt issue, the BISX-listed food retail and franchise group's adjustment to the VAT rate increase had "gone well to the best of my knowledge".

He added that it was too soon to determine the extent of any sales spike from a pre-VAT shopping rush, as the implementation weekend coincided with the month's end, although there was a sense AML Foods' stores were "busier" than normal.

Food and housewares stores appeared to see a spike in sales and shopper numbers in the final hours as the clock ticked down to the VAT increase's arrival. Kelly's Home Centre at the Mall at Marathon, both in the parking lot and at the check-out, was as busy as Christmas Eve when Tribune Business was there in the early evening.

Bahamian retailers, meanwhile, continue to call for VAT exclusive pricing, arguing that this would be "far more practical" and result in more government revenue by not deterring consumer purchasing.

They have been given until August 31 to adjust their prices to reflect the VAT increase from 7.5 per cent to 12 per cent. Jason Watson, president and managing director of Automotive Industrial Distributors Ltd (AID), described this task as "very frustrating".

"It is a huge task and an unnecessary waste of resources. VAT exclusive pricing is far more practical and would actually produce more tax revenue due to consumer behavior, but unfortunately the Ministry of Finance made a poor policy choice during the introduction of VAT," said Mr Watson.

The business community had lobbied the Government, to no avail during VAT's initial roll-out, to make their prices VAT exclusive, with some arguing that uncompetitive 'inclusive' price comparisons would likely drive more Bahamians and tourists to shop in the US as opposed to locally.

The private sector had been pushing for the New Zealand model, which mandated neither VAT 'exclusive' or 'inclusive' pricing. New Zealand only requires that merchants ensure that consumers have a complete understanding of pricing, and whether it includes VAT or not.

The Government's original VAT legislation, released in November 2013, had opted for 'exclusive pricing' where the product price and amount of due tax were shown separately on the label. It then reversed this position in the legislation that passed through the House of Assembly.

"AID will need to change tens of thousands of price labels on the retail floors of all seven locations. In addition there are hundreds of thousands of items in warehouses and in transit that were produced for AID with the price label on the package. Besides price labels all radio, TV and newspaper ads must be changed because they mention specific prices," said Mr Watson.

SuperValue's owner and president, Rupert Roberts, told Tribune Business: "If government allowed exclusive pricing there wouldn't be a need for re-pricing. It's going to be really expensive to re-price. Then there is the perception issue with VAT inclusive pricing. Inclusive pricing doesn't help sales because customers think they are being charged VAT twice."

Mr Roberts also argued that government's decision to eliminate VAT on breadbasket items could result in significant revenue loss. "The government is going to lose a lot of revenue. I don't think they realise that the food industry is going to collect a lot less VAT because the breadbasket items make up the bulk of our sales," he added.

Mr Roberts said merchants also want a list of medicines, such as aspirin and cough syrup, that are non-VATable.