The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government was yesterday urged to boost Back-to-School retailers by moving duty-free exemptions forward one month to a July 1 implementation.

Edison Sumner, the Bahamas Chamber of Commerce's chief executive, told Tribune Business that the date change was critical to enable uniform and footwear suppliers to enjoy the planned customs duty exemptions on footwear and clothing imports prior to the Back-to-School season's start.

He revealed that the duty waiver, which will apply to licensed clothing and footwear vendors, is currently scheduled to take effect from August 1 - a date after which most Back-to-School inventory will have been imported if it is not sourced locally.

This threatens to deny Bahamian retailers the potential benefits from a 25 per cent duty elimination in time for a season which, alongside Christmas, ranks as their busiest period of the year.

And they will also have to contend with paying the existing duty rates, plus the increased 12 per cent VAT, for one month, further impairing their competitiveness against online rivals and merchants in south Florida.

"We're now coming upon the summer holidays, and people will be preparing for school even though it is two months away," Mr Sumner told Tribune Business.

"Those merchants in the business of selling school supplies, particularly those selling uniforms, we want to be sure they are in position to take advantage of the Customs reduction in clothing and shoes to bring in supplies entirely duty-free."

Confirming that the Government currently plans to delay this exemption's implementation by one month to August 1, Mr Sumner said the Chamber was advocating on behalf of these retailers for that date to "move up to July 1".

Representations have already been made to the Minnis administration, and the Chamber chief executive added: "We've asked them, based on some of the situations we've encountered from this industry, to move it up to July 1, especially for those selling school supplies, so they can avoid paying Customs duties on shoes and clothing imports at 25 per cent.

"The Government is considering that, and hopefully they will announce that concession soon." The tax waiver, announced by the Deputy Prime Minister in the Budget communication, was initially hailed for helping to preserve Bahamian businesses and jobs in a retail sector that has been hit hard by online and US-based rivals.

"We are providing for the waiver of duty on clothing and shoe imports upon application by importers and retailers of same," Mr Turnquest said. "This will be extended to any merchant, large or small, who has a Business License for the sale of clothes or shoes.

"We are, at the same time, putting in place procedures to ensure that the savings are passed on to consumers. This will be a benefit to all Bahamians, but particularly to those who do not have the means to travel abroad to shop for their clothes like others are sometimes able to do."

The Government has seemingly delayed implementation of several key Budget 'tax breaks' beyond the July 1 start for the 2018-2019 fiscal year, with Tribune Business revealing yesterday that the VAT 'zero rating' for breadbasket food items has also been pushed back until August 1.

Marlon Johnson, the Ministry of Finance's acting financial secretary, told this newspaper that the month's delay would enable retailers' point of sale (PoS) and inventory mechanisms to account for the multiple tax exemptions.

"The reason for that is to give the retailers time to adjust their point of sale systems, their inventory systems and receipts to account for the exemptions," Mr Johnson said, indicating that the Government would be lenient when it came to merchants adjusting all their pricing, labelling and signage by July 1.

He added that the Ministry of Finance was "working furiously" to complete the "guidance notes" that will advise the private sector on the transition to a 12 percent VAT, with their release set to potentially occur as early as today "but certainly this week".

Mr Johnson reaffirmed, though, that "the unassailable message" is that the 60 percent VAT rate hike will take effect from July 1. And, notwithstanding the wait for the guidance notes, the Ministry of Finance is expecting all businesses to be "well advanced" in their preparations for 12 percent VAT so they can be compliant by the deadline.

But, with just eight 'working days' left before the new VAT rate takes effect, the rapid release of the guidance notes is becoming ever more critical to ensuring a smooth transition for both the private sector and government revenues.