NASSAU, BAHAMAS- The Opposition Free National Movement says the Davis administration’s decision to classify the removal of VAT on uncooked foods as “exempt” rather than “zero rated” will not bring the cost relief the government has promised and could instead drive food prices higher for Bahamian families.
In a statement Thursday, the party warned that the approach will affect wholesalers, supermarkets, gas stations, pharmacies and small neighbourhood food stores across Nassau, Grand Bahama and the Family Islands, potentially creating new costs across the food supply chain.
According to the statement, retailers estimate their non-staff operating costs could rise by as much as 7 to 8 percent from April 1, while wholesalers face similar pressures. If those costs are passed down the supply chain, the price of goods at the retail level could increase by a further 2 to 3 percent, the party said.
The party contrasted the move with the approach taken when it was in office, noting that VAT on breadbasket items was treated as zero-rated, allowing businesses to recover VAT at every stage of the supply chain so that savings could flow through to consumers.
“The Davis Administration has now abandoned that approach and has never once explained why,” the statement said.
The opposition argued that under the current plan food distribution costs will increase, leaving food stores with unrecoverable tax burdens tied to operating costs such as freight, utilities and commercial rent.
The party also criticized the government for failing to explain the policy shift, saying businesses are now scrambling for clarity on how the measure will work.
The Free National Movement called on the government to revise the VAT treatment to zero-rated and provide a full and transparent explanation of the policy change and its expected impact on food prices and small food retailers.
“At a time when Bahamian families are already struggling, this country cannot afford policies that sound helpful but make life more expensive,” the statement said.
