NASSAU, BAHAMAS — Economic Affairs Minister Michael Halkitis said yesterday that it is simply “not feasible” for the government to reverse its decision to place Value-Added Tax (VAT) on breadbasket items, noting that such a move would require the VAT rate to be raised.
Halkitis addressed the issue at an Office of the Prime Minister weekly press conference yesterday.
“It’s not feasible,” he said.
“When we first introduced it at 7.5 percent our advice after considerable deliberation was that the best policy was a low rate with minimum exemptions which was very effective. The Free National Movement (FNM) came in in 2017 and took it off breadbasket items. In order to do that they took it from 7.5 to 12 percent. When you begin to introduce exemptions the only way to do it is for you to pay a higher rate on everything else.”
Halkitis said that the decision to place VAT on breadbasket items and medications was not done without careful consideration.
“It was not something we did haphazardly. Breadbasket isn’t everything you buy out of the food store.” He noted that there are 22 items on the breadbasket list.
Halkitis acknowledged that the issue has become a sensitive topic, particularly as Bahamians continue to grapple with inflation and the increasing cost of living.
