The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A well-known businessman yesterday said Value-Added Tax (VAT) implementation would not “be as difficult as people make it out to be”, warning that the Bahamas would be forced into currency devaluation without tax and fiscal reform.

Dionisio D’Aguilar, the Superwash president, said that while the 2015 first half was likely to be “very long” for many Bahamian businesses and consumers, much of the fear and apprehension around VAT stemmed from the fact persons did not want to pay it.

But, warning that failure to tackle the $5.5 billion-plus national debt would ultimately result in the Bahamas losing its 1:1 currency peg with the US dollar, Mr D’Aguilar said the Government would need to “gently nudge” businesses through the initial VAT roll-out.

And the businessman, who is also chairman of BISX-listed food retail and franchise group, AML Foods, suggested that the Government would be even more lenient than suggested when it came to VAT-related re-pricing.

Arguing that the Government simply lacked the manpower and resources to rigorously police just New Providence’s multiple food stores, Mr D’Aguilar suggested it would give those companies making “good faith efforts” longer than the February 28, 2015, deadline to complete the transition to VAT ‘inclusive pricing’.

Noting that AML’s Solomon’s SuperCentre had 52,000 stock keeping items alone that needed to be re-priced, Mr D’Aguilar said that while the Christie administration might “talk tough”, its ability to police all it is implementing remains in question.

“They can talk tough, but the reality is that they don’t have the manpower to roll out a new programme and police it,” Mr D’Aguilar told Tribune Business.

Referring specifically to the VAT ‘inclusive pricing’, Mr D’Aguilar expressed confidence that even if it took large retailers “three, four, five months” to reprice all their existing inventory, the Government would be “understanding and accommodating” - especially if businesses could show they were making “good faith efforts” to comply.

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, this week 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.

Mr D’Aguilar was sanguine about the revised Government VAT pricing policy, telling this newspaper: “Personally, I’m not that bothered about it.

“I know the capacity of Government, and it does not have the capacity to run around to all these food stores and check all this stuff.”

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

Mr Rolle added that companies will have to use bin tags, flyers and other means “to openly advertise their VAT inclusive prices”.

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.”

Acknowledging that VAT implementation would have its difficulties, Mr D’Aguilar said: “It’s going to be a very long January-June to roll out this whole VAT thing.

“I think, at the end of the day, it won’t be as difficult as people make it out to be. The fear, the apprehension and the confusion is made worse by the fact people don’t want to pay this tax.

“The Government just has to make sure they have the capacity in place to help them roll this out, and gently nudge people along. If we don’t get this tax, we will devalue.”