The Tribune

By JADE RUSSELL

Tribune Staff Reporter

jrussell@tribunemedia.net

ECONOMIC Affairs Minister Michael Halkitis said yesterday that Value Added Tax will remain at zero on all unprepared grocery items if the Davis administration is returned to office after the next general election.

“As long as the Progressive Liberal Party is in power, VAT on grocery will be zero,” Mr Halkitis said yesterday during an Office of the Prime Minister press briefing. “I can't speak for what any other person would do. I can just say what we would do.”

Mr Halkitis was responding to a question from The Tribune on whether the Davis administration’s recently announced removal of VAT on unprepared grocery items from five percent to zero was a temporary or permanent measure. He said the exemption forms part of the government’s tax reduction record and stressed that there have been continued efforts to ease the high cost of living.

The Free National Movement has described the VAT exemption as a strategic move ahead of the upcoming general election. However, Mr Halkitis dismissed that claim, arguing that Prime Minister Philip Davis has long wanted to fully eliminate VAT on food and that the country is now in a financial position to absorb the change due to improved public finances and economic growth.

“We feel very confident that we can, because of the growth that we experienced in the economy, we can absorb any revenue loss associated with this reduction,” he said.

Mr Halkitis estimated that approximately $15m in revenue will be lost as a result of removing VAT on all unprepared foods. He referenced a recent International Monetary Fund assessment in October which cited strengthened economic growth, adding that officials continue to project positive economic performance.

VAT in The Bahamas was set at 12 percent under the Free National Movement administration led by former prime minister Hubert Minnis. In 2022, the Davis administration reduced the VAT rate from 12 percent to 10 percent but controversially extended the tax to previously zero-rated breadbasket items.

In January 2025, the government announced that VAT on all unprepared food sold in grocery stores would be reduced from ten percent to five percent.

While many Bahamians have welcomed the VAT exemption, major food retailers have raised concerns about implementation. The Tribune Business reported this week that Debra Symonette, president of Super Value, said she could not “make any promises” that all product prices would reflect VAT’s elimination by the April 1 deadline, citing the extensive task of adjusting prices for thousands of items that account for 80 percent of the company’s sales.

Ms Symonette said the 13-store supermarket chain may “have to ask for an extension” beyond the transition date to complete the repricing of all shelf items to reflect the VAT reduction from five percent to zero.

However, Mr Halkitis rejected those concerns, saying he is confident retailers can meet the deadline. He noted that the government typically allows a three-month adjustment period and said that with modern automation, sales systems and inventory management tools, retailers should be able to comply within that timeframe.

Mr Halkitis also appealed to retailers to avoid price gouging, noting that affordability remains a challenge for many citizens globally.