The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Bahamian retailers yesterday voiced optimism that the government’s declaration of a two-week back-to-school VAT “holiday” will boost sales and spending by hard-pressed Bahamian consumers.

John Cathopoulis, general manager of John’s Shoes Store, told Tribune Business it was critical for merchants to offer pricing that is competitive with their US counterparts if the local economy is to truly benefit from the initiative unveiled as part of yesterday’s 2020-2021 budget presentation.

“I guess any relief they can provide a citizen is good, right?” Mr Cathopoulis said. “I can’t imagine it being a bad thing. I guess it is positive, so I guess they don’t need it as much as the people do, so they decided to leave it with the people. That is nice.

“I think that will play a lot in the minds of people. If you buy enough stuff away then it doesn’t matter. You are still going to want to get that from there to make it easier on yourself, but for the most part if someone is looking to buy something they can get here I think it would help.

“But, to be honest with you, it still has to be cheaper here at the end of the day. Like if paying VAT landed is cheaper, or bringing it in through a courier is cheaper than what you can find in town, then there is nothing the government can do there. That is now up to the retailers to offer a competitive price relative to America.”

Other retailers, though, questioned whether the VAT “holiday” will offer zero-rated treatment and enable them to reclaim a 12 percent levy already paid on imported back-to-school inventory.

James Wallace, owner and operator of Janaees Uniform Centre, said: “Sounds promising to me. At least you can get the price of the items down to the persons, but the question is how does that kick to me who has paid VAT on this stuff I have imported. I have inventory I already have VAT on, so what does that mean? That has an implication to me: Are you zero-rating this?

“For me it sounds interesting in terms of savings for persons who are unemployed, because Janaees is looking to do something for back-to-school where people who may have been unemployed and laid off, we would have given them a special discount. But, with respect to the VAT holiday, that is good for the customer side, but how does that tie into me the business owner who has already paid VAT on his inventory?”

K Peter Turnquest, deputy prime minister, unveiling the initiative in the House of Assembly, said it was designed to provide both much-needed relief for Bahamian parents - especially those who have lost jobs or seen incomes cut as a result of COVID-19 - and boost retailers by encouraging persons to shop at home. The plan mirrors the nature and timing of the sales tax waivers Florida merchants are allowed to offer during back-to-school.

“We are pleased to announce that, for the first time, the government will provide for a “back-to-school” VAT holiday on school supplies, clothing and select food items for the two-weeks leading to the reopening of schools, thereby providing millions of dollars in savings in aggregate for parents across the country as they prepare students to return to school,” Mr Turnquest said.

“I would note that the tax exemption will only apply to items that are bought inside the country, and not those that are imported directly into the country. Just as we want to support Bahamian parents in this costly annual undertaking, we also want to support local businesses. So we want to encourage you to shop at home.”

Demond Thompson, general manager of Target Bahamas Uniforms, said: “I’m cool with that. But that is more of a concern for the people that are spending the money. It would be a benefit. From a business point of view it is going to cause people to shop locally, so that is a good thing.

“Businesses don’t pay VAT, so that is why I said this is beneficial for the end user, the children or the parents. It would be beneficial to me because they are going to save because they won’t be paying duty or VAT. The thing is with the clothing business you don’t pay duty, so if you don’t pay duty and VAT then that would be a good thing.”