The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value’s owner yesterday confirmed the decision to ‘exempt’ no goods from Value-Added Tax (VAT) would save his company $5-$7 million in extra costs per annum, with the sector’s “biggest objection” to the new tax now removed.

Rupert Roberts, Super Value’s president, told Tribune Business that the elimination of all VAT goods ‘exemptions’ was “hugely important” because food retailers and wholesalers would now be able to ‘net off’ 100 per cent of their input tax payments.

Under the Government’s initial 15 per cent proposal, between 75-80 per cent of food store inventories would have been treated as VAT ‘exempt’, meaning retailers would only have been able to ‘recover’ 20 per cent of the tax paid on their inputs.

Tribune Business was told yesterday that this would likely have increase the prices of non-exempt food items by 10-15 per cent, plus resulted in jobs losses and store closures across the industry.

But the Government, in its revised 7.5 per cent plan, appears to have implemented much of what the private sector and various consultants have recommended - at least at the macroeconomic, big picture level.

Mr Roberts, though, told Tribune Business that while there was “no use going over spilt milk”, the Christie administration could have had a fully functioning VAT in place by its original July 1 target date had it listened to the business community’s advice.

And he reiterated that it was “totally impossible” for the Government to hit its revised January 1 VAT implementation date given that just ‘four months’ were left for training and readiness preparations.

“That’s what we were urging for for the past year,” Mr Roberts said of the Government’s decision to declare all goods non-VAT ‘exempt’. “That’s what the New Zealand consultants agreed with.

“So now the private sector, the Government and the New Zealanders are on the same page. It was going to cost us $5-$7 million with all those exemptions. Now we have no exemption.”

Describing the Government’s policy switch as “hugely important”, the Super Value president added: “I told the New Zealanders that with what they’re [the Government] planning, I’m going to need 28 accountants, and they agreed with me.

“With no exemptions, my single CPA can do it. The exemptions were the private sector’s, certainly the wholesalers and retailers, biggest objection to VAT, due to the complications.”

“I begged John Rolle [the financial secretary] to introduce a simple sales tax,” Mr Roberts said. “Have a simple workload and no distractions, and every month I will give him a cheque and not fall behind because of the system.

“I hope they basically gave the country what they wanted, so there’d be no fight and there’d be 100 per cent co-operation and compliance.”

Philip Beneby, the Retail Grocers Association’s president, yesterday said the Government’s decision to eliminate VAT ‘exemptions’ for goods indicated they had “seen the wisdom” of the private sector’s advice.

“As we have said, in no country where VAT has been introduced are food items exempt,” Mr Beneby told Tribune Business.

He said that, with between 75-80 per cent of food store inventories treated as VAT ‘exempt’ under the original proposal, food retailers would have been forced to compensate by increasing prices on higher-end, healthy foods that were VAT-able by 10-15 per cent.

“It would have had a serious impact, no doubt,” Mr Beneby told Tribune Business of the Government’s original plan. “Many of the retailers would have eventually either had to reduce their staff or close their business.

“You know, as we all know, how expensive it is to operate a business in the Bahamas when you look at all the costs involved, especially the electricity costs.”

The Government also appears to have moved closer to Mr Roberts’s position on how VAT should be displayed to retail customers.

He has called for the VAT payment to be disclosed to consumers on the cash register tape, and the draft Bill and regulations - while requiring VAT to be included in a product’s final price and not broken out - allow the tax sum to be shown on the sales receipt or invoice.

Still, Mr Roberts again voiced his doubts over whether the Government could achieve its January 1, 2015, implementation deadline.

“It’s totally impossible,” he told Tribune Business. “There’s four months - August, September, October and November. You’re not going to get anybody’s attention in the private sector in December.

“I don’t think they can do it in four months. There’s a lot of training they have to do.”

He added: “There’s no use going over spilt milk that’s poured over the dam, but if they’d given us what we’d asked for, and if they’d listened a year ago, they could have had VAT in place by now.”

Mr Roberts also expressed concern that January, as the post-Christmas month, was one of the slowest for the retail industry.

“One-quarter of the population find it hard to get an extra $5 a week, let alone another $7.50 on every $100,” he added.

The food retail and wholesale industries are also likely to benefit from the reductions in Customs and Excise duty rates unveiled by the Government yesterday, with tariff lines experiencing reductions by between 5-20 percentage points.