SUPER Value’s owner yesterday said will appeal to government for permission to revert to Value Added Tax (VAT) ‘exclusive’ pricing, blaming the switch for this year’s 10 per cent sales decline.
Rupert Roberts, while likely reigniting the ‘inclusive’ versus ‘exclusive’ VAT pricing debate, told Tribune Business that Super Value’s 2017 top-line had seen a marked decline in comparison to the two years prior, during which time the food store chain had used VAT ‘exclusive’ pricing.
“Sales have not been as good this year. Sales have been dragging this year. For almost two-and-a-half years we sold goods with VAT non-inclusive pricing.
The Government made us switch to VAT inclusive pricing and our sales fell off; our growth rate fell off 10 per cent ,” said Mr Roberts.
“Customers were paying, for example, $2.99 for a cantaloupe, and when they made us include the VAT in the displayed price that went to $3.21. Customers saw the $3.21 and thought they still had to pay VAT at the at the register; perception is reality. They figured our prices went up 7.5 per cent. We didn’t see the sales and Government didn’t get the VAT.”
Mr Roberts said he plans to appeal to the Government over the issue. 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. It then reversed this position in the legislation that passed through the House of Assembly.
Groups such as the Bahamas Federation of Retailers (BFR) and the Coalition for Responsible Taxation had lobbied the then-Christie administration to no avail to revert to VAT ‘exclusive’ pricing, with some arguing that uncompetitive ‘inclusive’ price comparisons would likely drive more Bahamians and tourists to shop in the US as opposed to locally.
The business community had been pushing for the New Zealand model, which mandated neither VAT ‘exclusive’ or ‘inclusive’ pricing. New Zealand only requires that merchants ensure that consumers have a complete understanding of pricing, and whether it includes VAT or not.
“We are going to go back at government and see if they will let us go back to VAT ‘exclusive’ pricing,” said Mr Roberts. “I think our sales will jump and the VAT we collect will jump.
“I think it’s a perception issue. We were selling corned beef at $1.97 and adding on VAT at the register. Then they made us price it at $2.11, and the customers believe they still pay VAT at the register. There is no question you can sell more without including VAT on the shelf. The public loved that for two years, and when they made us put the inclusive price on the product the complaints started and sales fell off.”
Mr Roberts added: “We were having a 10 per cent growth, and our growth fell to zero. The public wants the pricing the other way, and merchants want it the other way. If you go in Wal-Mart you purchase something and they add the tax at the register. I don’t see why we have to be contrary to the world.”