The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Value-Added Tax (VAT) endured a rocky start to life yesterday, with mass confusion in the petroleum industry and one major food store chain not charging it due to IT problems.

Rupert Roberts, Super Value’s owner and president, told Tribune Business that none of his stores levied VAT on implementation day after technical problems resulted in the day’s first consumers being charged 10 per cent - not the legal 7.5 per cent.

He said Super Value, and its Quality Supermarkets affiliate, had been left with too little time to get their IT systems ready across all stores after being overwhelmed by a New Year’s Eve pre-VAT buying rush.

While indicating that the situation showed the wisdom of his call for the Government to push VAT implementation back by one day, Mr Roberts said all system issues were resolved and the supermarket chain would be ready to levy the tax today.

“At about 7.10am, my store manager at Quality Supermarkets Winton was hollering at me that while it was 7.5 per cent [VAT] on the tape, it was actually charging 10 per cent,” Mr Roberts explained of his dilemma yesterday.

While no customer left the store after over-paying on VAT, Mr Roberts said the situation left him with little choice but to “pull the plug” and stop levying the tax until his IT personnel fixed the problem.

“We were scared to go ahead,” he added. “We just didn’t have enough time. We couldn’t change 300 cash registers [for VAT] in 10 hours. There was not enough time for testing.”

Tribune Business contacted Mr Roberts after seemingly not being charged VAT, and seeing no VAT-related pricing or advertising, in Super Value’s Winton store early yesterday afternoon.

Another Tribune employee was told by the manager at another Super Value store that no VAT was being levied on consumers.

“No, we were not charging VAT,” Mr Roberts confirmed to Tribune Business. He indicated that Super Value would be prepared to absorb any January 1 VAT, and pay it on its customers’ behalf, should the Government insist on receiving it.

Given that many food stores were only open for a limited time yesterday, sales - and the amount of VAT incurred - will not be significant.

Yet the confusion, if anything, was greater among petroleum distributors and their gas station operators, some of whom remained closed yesterday until the situation was clarified.

Gowon Bowe, the Coalition for Responsible Taxation’s co-chairman, told Tribune Business the problems stemmed from some distributors/retailers believing the Government had allowed them to “defer” VAT’s implementation due to price control concerns.

The supposed ‘deferral’ had allegedly been granted because to charge VAT would have put dealers over their approved Price Control limits, breaching the latter Act.

“I understand there’s quite a number of areas of confusion,” Mr Bowe told Tribune Business, adding that he was seeking to get final clarification on the gas station/petroleum dealers matter from the Ministry of Finance.

Mr Bowe said no formal or written communication on the matter had been issued by the Government, and he understood the Ministry of Finance had expected the petroleum industry to charge VAT from the moment it had been implemented.

But due to the confusion, gas station operators were either “staying closed until they get official word or charging [VAT], as they do not want to be offside” in terms of the law.

“They’d been told it was being deferred temporarily because of price control,” Mr Bowe told Tribune Business of the distributor/operator feedback coming to him.

However, he described this rationale as “sounding like a bit of hogwash to me”. Given that VAT was a “flow through” to the consumer, Mr Bowe said it should not impact dealer margins, and he was unsure how it would affect price control limits.

Tribune Business was itself able to confirm the petroleum industry confusion yesterday. One dealer, requesting anonymity, said: “All I know is that the VAT has been suspended.

“I’m waiting on the Government and my supplier for clarification. I can’t give you any information on the why and how. There’s nothing I can say with any certainty. I’m not even open. I’m waiting to hear.”

Yet another gas station operator, speaking also on condition of anonymity, added that he was open and levying VAT on all goods sold in his gas station’s store.

Mr Bowe, while emphasising that “the world didn’t come to an end” with VAT’s implementation, said the petroleum industry situation showed the need for clear, advance communications.

Expressing hope that the problems had not resulted from a “malicious hoax” or deliberate attempt to spread misinformation, Mr Bowe said early dialogue between government and industry would prevent “rumour and sip sip dropping in”.

Mr Roberts, meanwhile, said his multiple locations had been left with too little time to make the necessary IT changes after being “overwhelmed” by a New Year’s Eve rush from consumers seeking to save on VAT.

“We were providing girls on the front line with juice and soup to keep them standing,” he added, with many stores not closing until 11pm. With the same locations opening at 7am yesterday, the window to effect the necessary IT changes to 300 cash registers, spread across multiple stores, had proven too short.

“We just couldn’t. It was impossible,” Mr Roberts said, adding that the necessary repairs had been made, and Super Value would be able to start levying VAT as of today.

“It’s all going to work because we’re going to make it work,” Mr Roberts told Tribune Business of VAT. “We have no choice. We have to make it work.”