The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Caribbean Bottling’s president yesterday said the 4-5 per cent decline in its January sales could not be solely attributed to Value-Added Tax (VAT), arguing that the new levy had “gone over well” given the circumstances.

Walter Wells told Tribune Business that while the Coca-Cola distributor had encountered “some hiccups” early in VAT implementation, these had quickly “settled down”.

And, given that VAT had imposed a discipline and enforcement method that Bahamians - both businesses and customers - were previously unaccustomed to, Mr Wells said the 7.5 per cent levy seemed to have largely been accepted.

“It’s still a learning curve to some degree for all parties,” he told Tribune Business. “There’s nothing monumental that’s causing any grief.

“Initially there were some hiccups, but these settled down as the month progressed.”

Mr Wells explained that Caribbean Bottling was “working through” VAT concerns as they came up, disclosing that different interpretations of the Act, and accompanying Rules and regulations, were at the heart of implementation issues in the tax’s early days.

He told Tribune Business that one issue had centred on ‘border VAT’, and whether it would operate as a “tax on a tax”. This relates to whether VAT should be levied solely on the ‘Freight on Board’ landed cost, or on top of both this and due Customs duties.

“There was some of that, but they [the Government] came and said it is what it, and we have managed it accordingly,” Mr Wells added.

Emphasising that VAT was essentially a ‘consumer pass through, with the 7.5 per cent paid by the end user on all sales, he told this newspaper: “It hasn’t had a huge impact on our business.

“My initial take is that sales were slightly off from last January, but January tends to be the softest month.”

Mr Wells said Caribbean Bottling’s January sales were influenced normally by the weather, increasing if it was warmer and going in the opposite direction if colder.

“Our sales for January were off in the region of 4-5 per cent, but I would not say that’s necessarily because of VAT,” he revealed.

“I think it has been accepted, and has gone over generally well given that we’re not accustomed to this type of tax. I’ve not heard of any major issues around it.

“Given that it is totally new to us, it has gone over well. I would say generally that it’s been more positive than negative.”

Elsewhere, Mr Wells said Caribbean Bottling’s move into its new Freeport headquarters, completed on October 1, 2014, had “given us the space to grow as the economy grows”.

The drink bottler/distributor is adopting a ‘steady as she goes’ strategy for 2015, with Mr Wells acknowledging that the Bahamas was “struggling with a high” unemployment rate of more than 15 cent.

With this also affecting the private sector, the Caribbean Bottling president said the Bahamas was nevertheless “chugging in the right direction” through Baha Mar’s impending March opening and the creation of 4,000-5,000 jobs.

The increased employment should translate into greater consumer spending and a faster circulation of money within the Bahamian economy.

“I’m encouraged by what I’m hearing and seeing this year,” Mr Wells added, saying the Bahamas needed to bring more major foreign direct investment (FDI) projects to fruition rather than relying solely on Baha Mar.