The Tribune

By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

Government officials yesterday confirmed that the three-week Back to School 'VAT-free holiday' will run from August 19 to September 10 after merchants called for clarity on the dates.

The Department of Inland Revenue, in a statement, said personal computers, tablets, laptops, notebooks, uniforms, shoes, underwear, hair accessories and bookbags will be among the items that will attract a zero VAT rate during this period when acquired for students returning to school.

The confirmation came as retailers affirmed that Back to School-related sales have returned to pre-COVID levels. James Wallace, owner/operator of Janaees Uniform Centre, said: “Back to School sales are at the same level as they were pre-pandemic, which to us is a good sign that people are going back into setting up for schools to be open.

"Last year we didn't have that. When school opened in September, they weren't quite sure what they were doing. So we're satisfied that we've seen sales returned to the pre-pandemic level.” Mr Wallace said his store typically does not see an increase in sales during the 'VAT-free holiday', with many shoppers "frustrated" that it is held so late in the summer that many of the products they are seeking are sold out.

“We just see basically the same static sales; it’s just that it's VAT free," Mr Wallace said. "We're not sure whether or not people bought an extra item because they don't have [to pay] 10 percent. We don't really see it like that. We just see a lot of frustrated people complaining that the VAT holiday is so late and, if they wait, most of the items are sold out.”

Mr Wallace explained that most parents have already purchased uniforms by the time the VAT holiday starts in mid to late August, and only last-minute clients benefit from the tax's elimination. He added that the timing of the VAT-free holiday may be intentional as the policymakers are likely aware there are fewer persons looking for Back to School items at this time.

He added: “People start purchasing before the VAT holiday because one of the things that most have come to realise is that when the VAT holiday reach they can’t find the items because they are sold out.

“So it's kind of late. Only the last-minute shoppers are scrambling around, and they can’t really find all the items because most people shop early. So it may be strategic by the Government to put the VAT holiday very late in anticipation that there will be less people out there in the market purchasing, so it's to their advantage if they want to keep maximising their revenue.”

The Department of Inland Revenue yesterday urged merchants participating in the Back to School 'VAT-free holiday' to maintain inventory listings identifying each stock-keeping unit (SKU) sold at the zero rate along with descriptions of the items sold.

Retailers will be allowed to accommodate layaway purchases before the 'VAT-free holiday' starts. However, Department of Inland Revenue officials said layaway purchases will only attract a zero VAT rate if they are completed during the three-week tax relief period.

Laptops, electronic book readers, tablets and tower computers that cost $3,000 or less will be included in the VAT-free holiday. Cell phones and video game consoles will not. All clothing, uniforms or fabric costing less than $100 per unit will attract a VAT-free rate.

Uhura Woodside, manager of Nassau Stationers, said Back to School sales are "coming along" and customers have been inquiring about the 'VAT-free holiday' all summer. She added that schools such as Nassau Christian Academy (NCA) will open before the tax relief arrives, so parents of students at that school cannot wait for it to arrive.

“Most persons are asking: 'Well, when is the VAT holiday going to be?' and they are trying to hold on," she said. "Other persons, they say: ‘You know what, I don’t want to wait on that and then I don’t find what I need’ as opposed to waiting on the 10 percent and then the item is sold out. So some wait, some don’t.”

“People come in early for books, especially how Nassau Christian Academy is going to open on August 14. They need to have their books. We have a lot of persons who have bought already.”

Simon Wilson, the Ministry of Finance's financial secretary, previously said the Government was seeking to "tweak" this year’s 'VAT-free holiday' to provide merchants and consumers with "more meaningful benefits". He argued that the financial benefits from the initiative as presently structured are more “symbolic than real” because many school supplies - including clothing and computer equipment - already enjoy duty-free exemptions year-round.

The precise nature of the “tweaks” and “more meaningful benefits” was not disclosed, and it is unclear from the Department of Inland Revenue communication if the Government has made them as the release for 2023 is identical to the one issued in 2022 save for the dates.

Mr Wilson also said the Ministry of Finance has seen fewer businesses apply for the exemption because it was viewed as “administratively burdensome” and did not spark a significant increase in sales as shoppers are able to buy Back to School supplies on a year-round basis.

He spoke out after Kwasi Thompson, the Opposition’s finance spokesman, again sought to slam the “late again” Davis administration for failing to confirm if the Back to School ‘VAT-free holiday’ would be held this year and between what dates. The east Grand Bahama MP argued that the potential savings would be especially valuable for vulnerable lower and middle income Bahamian families who have been hit hard by post-COVID inflation and the cost of living crisis.