0

Super Value Chief: Abandon All Exemptions For 10% Vat

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value's principal yesterday argued that a ten percent VAT could achieve the government's fiscal goals if it abandons its multiple tax exemptions.

Rupert Roberts, pictured, told Tribune Business that the Minnis administration should "claw back" the millions of dollars in VAT revenues it will forego on the likes of "bread basket" items and utility bills rather than increase the tax rate by 60 percent.

Pointing out that the budget will likely increase "breadbasket" goods as a percentage of Super Value's inventory to 50 percent, Mr Roberts said this would result in the supermarket chain "collecting half the tax we do now".

The Super Value chief said the government's plan will result in a "tax break" for the rich, and he urged it to allow a three-month transition and VAT 'exclusive pricing' as part of moves to increase the rate to the proposed 12 per cent.

The Minnis administration is planned to treat so-called 'breadbasket foods' as zero-rated in a bid to minimise the VAT rate hike's impact on lower income Bahamians, but Mr Roberts argued that studies conducted prior to the tax's 2015 implementation all suggested this was the wrong action to take.

"There's still a large contingent for no exemptions because when we were involved with the Chamber's Coalition for Responsible Taxation we did studies showing exemptions emphatically would not work," he told Tribune Business.

"But they're still looking at doing exemptions. You're giving exemptions to the rich, the middle class, the poor and underprivileged. The underprivileged can be handled by increasing the social security budget, and you don't have to part with all these millions of dollars" in VAT revenues.

Mr Roberts continued: "Forty per cent of our sales are breadbasket, and in convenience stores it's about 100 per cent. If you take the VAT off, breadbasket items are going to go up to 50 per cent, and they don't have to part with that. We'd collect half the VAT we do now.

"That's going to be our push. If they [the Government] had more studies and facts, they'd do things differently. If they didn't have all these exemptions, they may be able to do a 10 per cent VAT and bring in enough revenue. We don't want to slow down the economy; we want to keep it moving.

"A 10 per cent VAT would be nice - if there were no exemptions. It's not my decision. Proper studies would put us back to where we were; no exemptions."

The Government believes a 12 per cent VAT, representing a 60 per cent hike to the current 7.5 per cent levy, is the best option available to it in closing a $400 million financing 'gap' that will allow it to both pay-off $172 million in unfunded 'arrears' and allow it to hit its Fiscal Responsibility Bill targets.

Many Bahamians, though, believe the magnitude of the VAT increase and pace of fiscal consolidation are too much for the economy and struggling Bahamian households to bear, given that it will increase inflation and living costs while lowering disposable income and consumer/investor confidence.

However, Mr Roberts' call for a 10 per cent VAT has already been echoed by the likes of Gowon Bowe, the Bahamas Institute of Chartered Accountants (BICA) president, and ex-Cabinet minister, Leslie Miller.

For the 2018-2019 Budget abandons the low-rate, broad-based VAT model that was praised by the likes of the International Monetary Fund (IMF) and Inter-American Development Bank (IDB) as the most efficient such tax in the Caribbean.

The move to introduce multiple exemptions also increases the complexity and costs associated with the private sector's administration of VAT, while creating loopholes that undermine compliance and facilitating avoidance.

Mr Roberts, meanwhile, said that while the VAT rate hike and exemptions represented a "flick of the switch" and was "easily done" for Super Value's systems, changing all shelf and inventory prices for July 1 was a different matter.

"You can't expect supermarkets to change from one price on Saturday night and open on Sunday morning with another. That's impossible," he told Tribune Business. "How much time is the Minister going to give us to do that?

"That's why there's a body pushing for VAT exclusive pricing this time. If we do inclusive pricing it looks like pricing has gone up; it looks like consumers got slammed at both ends. I hope they decide to make it non-inclusive, and I think that's what they're going to do. They'll have to give us time; three months would be a good grace period."

Comments

The_Oracle 2 months ago

Sensible enough, and no software modifications for exempted items. (unlikely to be done in less than a month by food stores or utilities affected)

0

Well_mudda_take_sic 2 months ago

A 10% VAT with no exemptions could work, but only if accompanied by sustained belt tightening aimed at significantly reducing the size of our grossly over-bloated public services sector. And of course the scourge of the criminal empires run by the numbers bosses would have to be dealt with, in part through much higher taxation and the establishment of a completely tax-free National Lottery owned by the government of the day and initially operated by reputable and seasoned foreign lottery experts from Canada or the U.S..

0

TheMadHatter 2 months ago

Isn't Roberts a white man? How can he possibly care about Bahamians? He is obviously up to some scheme to raise VAT to 32% so he can become a millionaire.

LOL.

0

Sign in to comment