The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value’s owner yesterday said it was impossible for the food retail industry to pay the new “exorbitantly high” Business Licence fees one-time, as he dismissed claims he was ‘bullying’ the Government over its Value-Added Tax (VAT) proposals.

Rupert Roberts told Tribune Business that he and others in the industry had simply been attempting to “lay out the facts” to the Government on VAT’s likely negative impact on the sector’s employment levels and profitability, but their efforts over the past six months had fallen on deaf ears.

Responding to Michael Halkitis, minister of state for finance, who had accused him of “causing hysteria” with his Monday interview in Tribune Business, Mr Roberts said he would keep presenting the facts to prevent VAT from “derailing the Bahamas”.

The Super Value president reiterated that his main concern, shared by virtually all other food retail and wholesale operators, was that VAT’s introduction - as proposed - would hit the sector with a ‘triple whammy’.

Apart from the last Budget’s significant Business Licence fee increases, and the negative seven percentage point margin endured on ‘breadbasket’ items under Price Control, Mr Roberts and other retailers have warned these will be exacerbated by their proposed tax treatment under VAT.

With up to 75-80 per cent of their inventories consisting of ‘breadbasket’ items, which will be treated as ‘exempt’ under VAT, food stores will only be able to recover 20-25 per cent of their input tax payments - a situation that will force them to either increase prices on ‘taxable’ items or cut costs, such as employee numbers.

This situation is seen as merely further exacerbating the Price Control ‘loss leaders’, and Mr Roberts again told Tribune Business that the proposed tax treatment for food stores would likely add $6 million to his annual costs.

As to Mr Halkitis’s suggestion that he sit with the Government and have an ‘intelligent conversation’, Mr Roberts responded: “We’ve been doing that for six months and they’re not listening.

“Now we should sit down and have an intelligent conversation, when they’ve not been listening for six months? He [Mr Halkitis] misses that we’re going to have to pay something on VAT.”

Emphasising that it was the Bahamian people who will have to pay VAT, Mr Roberts added: “Is anybody trying to bully them? We’re trying to point out the shoals to the SS Bahamas so it won’t hit any of them.

“Halkitis is a young man. I’ve had 60-65 years in this industry, not counting my school days. He should listen. We’re just trying to point out the facts, have been trying to do it for six months. They’re not listening.”

The Super Value president added: “We’re not trying to bully anybody. We know they don’t know the industry. We’re trying to point out the pitfalls to them.

“We gave them one, two, three - the enormous, unfavourable jump in Business Licence fees; the 18 per cent gross on 80 per cent of our volumes, and expenses at 25 per cent; and then VAT is coming, with us having to absorb 75-80 per cent of expenses that will be charged to VAT.”

Mr Roberts told Tribune Business he was “really surprised at the Government’s reaction to advice”, following his comments on Monday that a 400 person lay-off may be “coming down the pipeline” across his various food retail interests unless it relents over VAT, Price Control and other recent tax increases.

He revealed then that his annual Business Licence fee had risen from around $1.7 million to close to $4 million ($3.8 million) as a result of the 2013-2014 Budget’s tax reforms.

And, yesterday, Mr Roberts said such an increase had made it impossible for Super Value and other food store businesses to pay this fee one-time, and they were now seeking the Government’s permission to cover it via monthly instalment payments.

“We’re now trying to get an appointment to see the Business Licence man to complain that that fee is exorbitantly high, and we can’t possibly pay them,” Mr Roberts told Tribune Business.

“Mr Halkitis is encouragingly sympathetic in instances that people can’t pay. The grocery stores can’t pay it in one shot; they have to pay it monthly. He’s sympathetic to them; I hope he’s sympathetic to us.”

The Super Value owner said friends within the Progressive Liberal Party (PLP) had privately encouraged him to “keep firing the facts” in the hopes of putting the brakes on VAT, suggesting that the party was “split down the middle” on the issue.

“The business sector is not trying to bully, but it can’t back down and can’t change the facts,” Mr Roberts told Tribune Business.

“The facts are the facts, and if they don’t like to hear them we will have to repeat them again and again until they listen, otherwise it’s going to derail the Bahamas. I’m not trying to frighten the Bahamas; there’s no boogeyman.”

Mr Roberts on Monday told Tribune Business that unless the Government responded to the industry’s cries with “quick action”, his supermarket chain’s first potential move would be to assess the future of its smaller, inner-city stores.

Noting that these were losing an average of $20,000 per month, Mr Roberts also disclosed that his three-store Quality Supermarket chain - outlets taken over from the ruins of City Markets - had yet to reach the ‘black’.

“Our Business Licence is almost $4 million, $250,000 a month,” Mr Roberts told Tribune Business. “That’s what it increased to. From around $1.7 million, or from $1 million something, it went to $3.8 million.

“On electricity we pay $750,000 a month, three-quarters of a million per month or $9 million a year. That has to be absorbed in retail prices, and that’s why the group went to Price Control.”

Looking ahead, Mr Roberts said his businesses were “facing” the potential lay-off of 250 employees in Nassau, and another 150 in Abaco, if the worst-case scenario materialised.