NASSAU, BAHAMAS – Super Value’s principal, Rupert Roberts, says retailers will likely need more clarity on which food items will qualify for the five percent Value-Added Tax (VAT) reduction. He noted that while the public was eager for the reduction to take effect immediately, they should appreciate the “small mercies.”
“We could have had it implemented this morning. I think the public wanted it now, but they should be grateful for the small mercies. However, it’s not entirely clear what specific items will be affected. Some food stores will have more items at the five percent mark, while others may have fewer. We need more guidance on this. For example, there are items like baking soda—should it be considered edible or not? While you may use it in food preparation, I’m not sure how the government is looking at it” Mr Roberts told Eyewitness News.
He added: “I also think the public was expecting more items to be included, such as laundry detergent, dish liquids, and other household products that supermarkets carry. The difference between what the public wants and what the government can provide is a separate issue. At the end of the day, people will have to accept what the government decides, but we do need more clarification on the details. Thankfully, there is still ample time for us to get that clarification.”
Minister of Economic Affairs Michael Halkitis, appearing on a local talk show regarding the government’s decision, noted that the move is manageable within the government’s fiscal constraints.
“We have estimated, for example, we have technical people within the ministry who have estimated how much revenue would be foregone with this move. We feel that this is something manageable that will not impact our fiscal position and forecast. But how much it impacts each individual will depend on their habits, et cetera,” he stated.
When asked why the reduction isn’t applied across the board, Halkitis explained: “Well, you know, when you do these steps, you have to—I say to people all the time—the government has to be funded. And so, it is not at this time contemplated that we can go down to five percent. Now, sometime in the future, if certain things fall into place—economic growth and some of the other things, like the recent implementation of the minimum corporate tax on large multinational enterprises—we are confident that this will positively impact our revenue. We are also doing a lot of work in terms of large taxpayers and identifying areas in the country where we weren’t collecting what we should. We have a task force, for example, looking at private islands, cruise ships, and the activities that go on in those areas.”
Regarding why only food items were included in the reduction, Halkitis said: “When you think about the basic, necessities for individuals, food is one of them. The Prime Minister has been pushing for this, encouraging us to do studies over the last 18 months to two years, gathering information to see exactly what we can do. The idea is that food is a basic necessity for existence.”
He further noted: “It’s not a temporary decision. I know some people might say, ‘Well, it’s a ploy, and after the election, it’s going to go back up.’ No, this is what we can support at this time.”
Former Deputy Prime Minister and former Finance Minister, K Peter Turnquest who spoke to Eyewitness News, said: “I think the government recognizes that the reversal of the VAT exemption on breadbasket items, medicines, and female products was a mistake, and they’re seeking to correct it by reducing it to 5 percent. I think, given the cost of living—both improved and the cost of doing business—the exemptions should have been restored to zero, which would have provided more significant relief to the Bahamian people. That being said, I think it’s a positive move.”
He added: “We have to be concerned with the government reducing revenue intake and what that means to the overall budget estimates for the year. The Prime Minister said there will not be a significant impact, which tells me that the relief being given is insignificant to overall consumer spending, and government revenue, or there is some other method of making up that difference. Either way, we have to be careful with the signals being sent to the credit markets and what that means to the short- and long-term deficit and overall national debt in the near term. I applaud the government for the action, but I think there is room for them to go further.”
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