NASSAU, BAHAMAS – Minister of Economic Affairs Michael Halkitis admitted on Thursday morning that the Ministry has concerns about its ability to police the new Value Added Tax (VAT) reduction to five percent on food.
Halkitis, speaking on a local talk show, explained that government can only police approximately 22 or 23 items regulated by price control.
“Unfortunately, when you have items that are not on the price control list it is difficult to monitor because a merchant will tell you, ‘Yes I experienced some savings because the duty went down but my light bill went up,’ or, ‘I am having to pay more anyhow in the states because of shipping, supply-demand issues there, people are charging me more.’ “
Halkitis said however that it is a challenge experienced by governments all around. He suggested that competition and the education of consumers may be the only avenue to assist.
“If you have more competition in terms of sources of where you can get your goods…and a vigilant population is saying, ‘Hey the duty went down on this and you haven’t adjusted your price and then some pressure is put in that way.’ “
Items under price control regulation include: butter, cooking oil, mayonnaise, grits, cheese, corned beef, evaporated milk, margarine, rice, sugar, flour, bread, tomato paste, canned fish, baby cereal, baby formula, soups, broths, baby food, condensed milk, powdered detergents, condensed milk, soaps, fresh milk, mustard.
There have also been concerns that the move was politically motivated and would be reversed, Halkitis said, “The only reason it would be temporary is if we choose to go lower.”
According to Halkitis the reduction applies to food stores, wholesale stores and individuals bringing in groceries on a pallet.
The change goes into effect April 1st to provide time for retailers to adjust their systems and allows government enough time to educate consumers.
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