By NEIL HARTNELL
Tribune Business Editor
The Government’s insistence on Value-Added Tax (VAT) inclusive pricing will create “unnecessary work” for Price Control as well as the retail industry, a leading operator saying yesterday: “We could change night into day easier than this.”
Rupert Roberts, Super Value’s owner and president, told Tribune Business that the demand for VAT ‘inclusive’ pricing would force Price Control to “revise all its methods”.
Apart from the extra cost and administrative burden this will impose on both retailers and the Government, Mr Roberts said “question marks” remained over the two-month ‘grace period’ the Government is allowing the industry to convert to VAT ‘inclusive pricing’.
The Ministry of Finance and its VAT Unit, acknowledging that it would be impossible to complete the transition overnight, have given all Bahamian retailers until February 28, 2015, to fully adopt ‘inclusive pricing’.
However, Mr Roberts said the private sector was still ‘in the dark’ as to what was required. He questioned whether this meant they had to have all ‘item prices’ changed, or if the February 28 deadline applied just to ‘shelf pricing’.
The Super Value owner said the resulting uncertainty meant few merchants had completed registered to pay VAT, and he added bluntly: “I don’t feel like registering for the unknown.”
Suggesting that the Government probably felt the two-month ‘pricing transition’ extension had “lulled us to sleep”, Mr Roberts told Tribune Business: “We have to change 35,000 prices instantly.
“If they give us five years or 10 years, it won’t make a difference. It’s impossible to do it in 2,000 years.”
The Government’s original VAT legislation, released in November 2013, had opted for ‘exclusive pricing’ where the product price and amount of due tax were shown separately on the label sticker.
It, however, reversed this position in the legislation that passed through the House of Assembly, and the VAT Act - and accompanying regulations - now require the tax to be incorporated into the sole price shown on both the product and shelf.
This means retailers, and all merchants who sell physical goods to the public, have to change the pricing mechanism for all products in their inventory to conform with the law.
Many businesses, though, have already shown they will ‘break out’ the amount of VAT included in the price, showing it as a separate line item on the sticker label, so consumers understand how much they are paying in tax.
Mr Roberts, repeating industry calls for a return to VAT ‘exclusive pricing’, said the tax only needed to be shown on the register tape and consumer receipts.
He argued that this was the common practice worldwide for countries that employed a sales or consumption-based tax, and Bahamians - as regular shoppers in Florida - were accustomed to the state’s 6 per cent sales tax being included in the purchase price, then broken out separately on the receipt.
“They want pricing to remain the way it is, and show it [the VAT] on the register tape,” Mr Roberts said of Bahamian consumers.
“The best thing the Government can do is amend the law to get around inclusive pricing. It’s just a simple exercise to have it on the tape.”
He added: “If merchants are going to collect VAT for the Government, the Government should make it as simple as possible for the public and merchants, allowing them to do it efficiently, easily and inexpensively.
“I don’t see the need for inclusive. I think they’ve just made a mistake and should correct it.”
Mr Roberts’s call echoes the views of many in the sector, including the Bahamas Federation of Retailers, which represents more than 100 industry players.
And the Super Value owner added that the VAT pricing policy would also create extra work for another arm of government.
“They’re going to have to revise all of the Price Control methods, and that’s a lot of unnecessary work they’ll have to go through, and give us new prices for flour, rice, sugar and everything else,” Mr Roberts told Tribune Business.
“If it’s not inclusive, they can just allow it to happen, 7.5 per cent on the register tape, and leave Price Control the way it is now. They have to go to the trouble of changing price control. It’s quite unnecessary.”
Calling on the Government to work with the private sector to ensure a smooth VAT implementation, Mr Roberts added: “It’s worrisome and even frightening, because in the two months they’ve given us to change the pricing, there are question marks.
“We don’t know what’s expected of us. It’s the unknown. We don’t know if they expect us to have the prices on the items changed, the prices on the shelf changed. It’s not really clear to merchants.”
Mr Roberts suggested this helped explain why the initial VAT registration numbers were relatively low. “I understand that as a result, none of the merchants are registering,” he added.
“The Ministry of Finance called us the other day, and I don’t like registering for the unknown. I hope they sort it out. I don’t know what’ll happen by January 1 if no one registers, and frankly I don’t care.”
Calling on the Government to be pragmatic, and implement changes similar to how it remodelled the initial, exemption-heavy, 15 per cent VAT, Mr Roberts summed up: “I could change night into day easier than I can change to VAT inclusive pricing.”