The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Ministry of Finance’s top official yesterday revealed the Government is seeking to “tweak” this year’s Back to School ‘VAT-free holiday’ to provide merchants and consumers with “more meaningful benefits”.

Simon Wilson, the financial secretary, confirmed to Tribune Business that the Davis administration will provide tax relief on the local purchase of school supplies, books and clothing for a similar period to last year’s initiative, which ran from August 22 to September 11, 2022.

However, 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.

As for the VAT, Mr Wilson said the Ministry of Finance had 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. The precise nature of the “tweaks” and “more meaningful benefits” was not disclosed.

He spoke out after Kwasi Thompson, the Opposition’s finance spokesman, again sought to slam the “late again” Davis administration for failing to thus far confirm if the Back to School ‘VAT-free holiday’ would be held this year and between what dates. He 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.

Describing the tax breaks as “so critically needed for many struggling Bahamian families”, the former minister of state for finance said: “As began by the FNM several years ago, this VAT holiday would eliminate the VAT for purchases of Back to School supplies, uniforms and footwear for a period of time.

“We recall vividly that, last year, we in the Opposition had to call upon the Government to do the right thing for the Bahamian people. And the Davis administration ended up doing a VAT holiday at the last minute with a very constrained timeframe and with much confusion among merchants and consumers.

“Bahamian families have been ravaged by the effects of global inflation over the last two years..... The Government’s commitment to Bahamian families must be more than just gimmicky and meaningful action. And implementing the VAT holiday will save Bahamian families at a time when it is critically needed.” Mr Thompson thus called on the Government to confirm if a Back to School ‘VAT-free holiday’ will be held this year.

Responding in the affirmative, Mr Wilson explained why the initiative is “symbolic more than real” when it comes to providing merchants and shoppers with real benefits. “Hopefully this year we will be able to tweak it a little bit to get some real benefits in and make it a bit mote meaningful,” he added.

“The clothing providers, the retailers, are already getting duty-free clothing in year-round. Most school supplies are duty-free, and computer equipment is duty-free. There is a wide spread of goods for Back to School that is already duty-free. And, when you move to VAT, the benefits are not as much as people think they are for business people.

“As we encourage more businesses to apply for the programme, every year we see less apply as they see it as an administratively burdensome and doesn’t translate into a significant increase in sales,” Mr Wilson continued. “Back to School sales can happen any time, any how. When we try and convince them to be involved in the programme, they say: ‘You know what? It doesn’t change my bottom line enough to take on the administrative burden’.”

The Back to School ‘VAT-free holiday’ was introduced by the former Minnis administration during the COVID-19 pandemic as a means to to encourage Bahamians to purchase school supplies, books and clothing locally, thereby keeping money circulating in the country’s economy and boosting revenues for businesses.