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'Headed For Chaos' On Vat-Inclusive Pricing

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value’s owner yesterday warned the Government it was still “headed for chaos” by insisting on Value-Added Tax (VAT) ‘inclusive pricing’, even though retailers had been granted a two-month compliance ‘extension’.

Rupert Roberts told Tribune Business that the Ministry of Finance’s “leniency” in giving Bahamian retailers until February 28, 2015, to get their shelf/inventory pricing in order was still not enough time, suggesting three months (to March 31) would have been more reasonable.

Questioning why the Government was insisting that all products be re-priced with VAT ‘inclusive pricing’, the Super Value president suggested it was because the administration wanted to “hide” future increases in the tax’s rate.

This, he said, would ensure consumers blamed Bahamian retailers and merchants for any VAT-induced price increases and cost of living rises, rather than the Government for increasing the tax rate.

The Super Value owner reiterated his call, and those of other retailers, for the Government to leave shelf pricing well alone, and only require VAT to be shown on the ‘register tape’ and customer sales receipts.

Mr Roberts was responding after the Ministry of Finance, in a concession to retailers’ concerns that it would be impossible to convert all their shelf/stock inventory to VAT ‘inclusive pricing’ by January 1, promised to be more lenient.

In a statement, John Rolle, the Ministry’s financial secretary, said the Government realised many businesses would “need extra days, and perhaps weeks” beyond January 1 to complete the re-pricing of all inventory.

He then promised that the private sector would be given until February 28, 2015, to comply with VAT ‘inclusive pricing’ demands, with enforcement of this requirement starting from March 1.

“I don’t think that’s long enough,” Mr Roberts told Tribune Business of the two-month extension. “If we were going to stock an entire store, that would take six weeks, but that’s with the store closed.

“While we’re doing business, that’s unreasonable. It should be extended to three months. Why put that time limit? Three months might not be enough.”

He was backed by Philip Beneby, head of the Retail Grocers Association, who told Tribune Business: “For some of the larger stores, we would question the two months to get everything in order, but for some two months would be adequate. It depends on the size of the operation.

“It could be more [months], but they want you to bring things in line as soon as possible, and don’t want to leave it open-ended.”

Mr Beneby acknowledged the need for the Government to set some kind of timeline, in order for retailers to have a sense of urgency to comply. For those who needed more than two extra months, he suggested the Christie administration would take a relaxed approach if the reasons were valid.

“If it doesn’t work for some, I’m sure they’ll take a look at it on a case-by-case basis, and give you some grace period or extended time,” the Association president added.

Mr Roberts, meanwhile, called for the Government to stick to the current pricing system, and questioned why it was failing to consult with the merchants over its plans.

“Why doesn’t the Government and the private sector work together to get VAT working properly, instead of dictating rules to the merchants,” the Super Value president added.

“They’re [the Government] not merchants. They don’t know what they’re doing. If you want to know something, ask the people who do it. Sit with the merchants, agree it and get everybody on board.”

Neither Mr Roberts and Mr Beneby, nor Gavin Watchorn, AML Foods’ chief executive, were aware of the Government’s VAT ‘inclusive pricing’ policy change until they were contacted by Tribune Business and informed of the policy change.

Using corn beef as an example, Mr Roberts said prices had remained at $1.97 per can for three years, and consumers would expect this to remain unchanged come January 1 - even though they would have to pay 7.5 per cent VAT on it.

Making the price “VAT inclusive’, and taking it to $2.12 per can, would “confuse the public”.

“The public want to keep the status quo,” Mr Roberts argued. And apart from having to re-price 35,000 items per store, he warned that the Government’s VAT pricing policy would force Super Value to change a ‘tried-and-tested’ accounting system that had been in place for 50 years.

“You can really make it an easy transition by leaving prices as they are, and putting it on the register tape. But they are going to make VAT complicated again,” Mr Roberts told Tribune Business.

“Ninety per cent of the complications were taken out of VAT when they removed all those exemptions. Now, they’re going to complicate it again just after they simplified it.

“We don’t see the need to do any re-pricing. It seems to me they’re trying to increase the cost of living another 5 per cent in addition to VAT,” he added. “That’s what I see coming down the pipeline.

“It is foolish, foolish, foolish. They’re [the Government] doing it wrong, and they’re not telling us why. I suspect they don’t want ius to put it on the tape because the next Budget they will increase the VAT rate to 10 per cent, the Budget after that they will increase it to 12 per cent, and the Budget after that they will take it to 15 per cent.

“They want to hide it from the public so they will blame businesses for the prices going up, when it’s the VAT going up. That’s why they don’t want to do it right.”

Under the initial 15 per cent VAT, Mr Roberts and other retailers had actually lobbied for ‘VAT inclusive’ pricing due to the number of ‘exemptions’ planned. Yet they have altered their position, and are now in favour of VAT ‘exclusive pricing’, following the Government’s decision to restructure the tax.

“They’re headed for chaos,” Mr Roberts told Tribune Business of the Government’s insistence on VAT ‘inclusive pricing’. “All I see on January 1 is chaos, chaos.

“I was beginning to hope this would go over smoothly and they’d listen to the merchants. There’s no use picking a fight with the merchants.

“Merchants have resigned themselves to collecting VAT for them, efficiently and accurately. Why don’t they let that happen?

“I’m going to collect the 7.5 per cent, hand it in as best I can, and if they put me in jail, then put me in jail. I’m not trying to be obstructive. They know I want to help them with VAT, help them to reduce the national debt, but they may be planning chaos.”

The Ministry of Finance said yesterday that it will allow stores to carry some items showing old, pre-VAT sticker prices.

“However, to help with consumer education and to ease the transition, business will have to use bin tags, flyers and other means to openly advertise their VAT inclusive prices,” Mr Rolle said.

He added: “The VAT Department is urging that notices of price changes be posted in stores before the end of 2014.

“As price tags are updated, customers may find some items with old stickers still in place. However, once the difference between the new and old stickers prices exactly match the amount of VAT that must be paid, consumers will not be allowed to exploit this difference by demanding the lower prices. We will recommend to the Government that the finalised VAT regulations reflect this policy rule.”

Businesses will, though, have to show VAT on customer receipts from January 1.

Comments

ohdrap4 6 years ago

just get color coded price tag -- blue tag is vat included and white tag is old price then put several signs explaining that, and reminding people that vat is so much percent

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The_Oracle 6 years ago

The mindset is harder to overcome than the change that must be done. Exclusive VAT pricing will help Bahamians understand that the government needs us For our money, derived from our efforts. But we can do without them and their waste and corruption.

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The_Messenger 6 years ago

"Questioning why the Government was insisting that all products be re-priced with VAT ‘inclusive pricing’, the Super Value president suggested it was because the administration wanted to “hide” future increases in the tax’s rate."

No kidding, in other news water is wet.

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observer2 6 years ago

Keeping the actual level of VAT hidden is consistent with how our government operates.

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killemwitdakno 6 years ago

It should have been EXCLUSIVE pricing as a security measure to prevent hiked prices. That's how receipts are done, tax at the bottom. Stupid

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