The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Many Bahamians are sceptical the Government will keep its promise to use Value-Added Tax (VAT) revenue to reduce the country’s deficit and $6 billion-plus national debt, according to a study conducted by College of The Bahamas (COB) students.

The study, conducted by fourth year accounting students, obtained replies from several major food retailers, as well as consumers, on VAT’s impact.

AML Foods, Super Value and Budget Food Stores all pegged the cost of implementing the necessary VAT systems at around $40,000. While AML and Super Value claimed that VAT had not really impacted their overall sales, Budget Food Stores reported that its top-line had decreased in the wake of the tax’s implementation.

And both Super Value and Budget Food Stores said the VAT transition had not been a smooth process for their operations. They described the preparation for VAT processing and filing as tedious.

Meanwhile, a survey distributed in the eastern district of New Providence to 125 persons found VAT had made no impact on the frequency of purchases. Yet there was a mixed response when it came to VAT’s impact on the quantity of purchases, and 85 per cent of respondents indicated they believe the VAT rate will increase.

The COB survey questioned students from various tertiary institutions about VAT’s impact on tuition fees and academic supplies. The study was divided into five sections: East, west, north, south and central New Providence.

Some 54 per cent of tertiary-level students agreed with the Government’s decision to implement VAT, but 92 per cent agreed that VAT should not be charged on tuition fees. A further 88 per cent said VAT should not be levied on education materials.

The western New Providence survey found that only 41 per cent of consumers checked to see if businesses were VAT compliant, while 71 per cent said the Government had not properly educated them about the tax.

The northern district survey of 75 persons revealed that 50 per cent found VAT had no impact on the frequency of their purchases, although the buying of non-necessity items was down significantly.

Based on the results of the southern district survey of 125 persons, most respondents said their purchases were now mainly necessity items, smaller quantities and an increase in the buying of generic brands.