The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian retailers have been left disappointed by Budget tariff cuts that were “not as broad-reaching as we’d have liked”, adding: “Ten percent of something is better than 45 percent of nothing.”

Tara Morley, the Bahamas Federation of Retailers’ co-chair, told Tribune Business that further duty reductions are “absolutely something retailers are looking for” to ensure price competitiveness with US and online rivals as well as ensure that a greater portion of consumer spending stays in the economy to benefit local businesses.

The Federation, its members and other retailers had submitted proposals for various Budget tariff cuts to the Davis administration via the Bahamas Chamber of Commerce and Employers Confederation (BCCEC), but the Government ultimately elected to keep the reductions narrowly focused on food, construction materials, electrical goods and renewable energy in a bid to ease the cost of living crisis and boost policy priorities such as expanding home ownership.

Ms Morley, while acknowledging the difficult and complex choices faced by the Government, told this newspaper of prevailing tariff rates and the 2022-2023 Budget: “Unfortunately it was not as broad-reaching as we would have liked. The thing is, at the end of the day, if people shop abroad instead of here, smuggling items in their suitcases or however they bring them in,10 percent of something is better than 45 percent of nothing.

“It just acts as such a deterrent when things are much more expensive here than they are abroad. Anything we can do to bring down prices locally encourages consumers to shop at home, and we get more VAT out of it. It reduces the cost to retailers, and reduces the cost of operating a business, and encourages growth with potentially more people getting into the retail industry as it reduces overheads so substantially.

“It helps with the cost of business,” she added. “You pay taxes when you make a sale versus paying duty, which you do not necessarily recover, at the border. It’s a continual discussion. It’s absolutely something we’re looking for. It’s absolutely something retailers are looking for. 

“I appreciate that the Government has some hard decisions to make with the Budget. When you take it [taxes] away, you have to get it from somewhere else. I do think that by encouraging more sales, the volume of sales at home, we are just broadening the tax base.”

Ms Morley, who voiced hope that the Government will consider tariff cuts for product categories not touched this time in future Budget preparations, argued that high duty rates - which deter local sales in favour of foreign purchases in Florida and elsewhere - generate little revenue gain for the Public Treasury. Her belief is that cutting tariffs, and encouraging local sales, will aid the private sector while generating taxes that the Government currently does not collect.

Among those product categories where retailers pushed for tariff cuts in 2022-2023 were furniture and gift wares, as many home goods are priced very highly. “Also there’s a lot of things in beauty,” Ms Morley said. “The Bahamas is making zero dollars off it because everybody is wanting to buy abroad instead of at home because it is twice the price here with 45 percent import duty.

“I don’t blame the consumer. It’s just this is really the type of thing we need to look at when we’re making government tax policy - how much we are losing when we have such a high tax rate on certain products.”

Meanwhile, the Federation co-chair said supply chain backlogs and inflation continue to take a toll on all businesses with little sign of easing in sight. “Prices are still going up with the cost of inflation,” she added. “It’s unavoidable here, and same story in the rest of the world. Unfortunately The Bahamas is getting hit harder than other parts of the world because we have to ship everything in.

“It’s a knock-on effect when you live on an island. The higher gas prices at the pump are concerning for everybody globally. The Europeans are screaming about it, the Americans are screaming about it and Bahamians are screaming about it. It’s going to be a tough period for sure...

“It’s a really crazy time to be trying to run a business. It’s hard to manage the timeline. We’re still getting shipments that were due from November. It’s hard to plan for your seasonal upticks in business and makes it more difficult to manage cash flow. You cannot rely on the supply chain to deliver in a timely manner, not to mention the loss of sales because you have no inventory as it did not get in on time,” Ms Morley continued.

“It just seems to be certain categories of items that have an issue with the production. It’s all over the board. It’s definitely going to get worse before it gets better because we’re hearing predictions of a recession, and when the US gets a cold The Bahamas catches pneumonia. 

“There’s just a lot of uncertainty. It’s hard to plan. I’m coming to the end of the buying period for the festive period, November to December, and have no clue what it will look like in six months. Usually I can gauge where the economy is going but the fact it’s topsy turvy makes it so unpredictable these days.”