Grocery retailers ‘thrown under bus’ by VAT marketing

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Furious grocery retailers yesterday blasted the Government for “throwing us under the bus” with misleading statements on Value-Added Tax (VAT), and warned consumers that duty reductions would not lead to blanket food price cuts.

Rupert Roberts, Super Value’s owner, and Philip Beneby, the Retail Grocers Association’s president, told Tribune Business they had calculated that all the import tariff-related “tweaking” would only reduce overall food costs by 0.5 per cent.

And, with many of the duty cuts falling on small, volume, slow moving products, the duo argued that the would do little to minimise 7.5 per cent VAT’s ‘cost of living’ impact - unlike what the Government is suggesting via its representatives and media advertising.

Michael Halkitis, minister of state for finance, was quoted in one newspaper as suggesting that food prices would fall due to corresponding duty rate cuts designed to minimise VAT’s impact - a message that Messrs Beneby and Roberts said would result in “calamity”.

They suggested that Bahamian consumers were being “deceived” to ensure they blamed VAT-induced cost of living increases on the private sector and merchants, not the Government’s new tax regime.

Urging the Christie administration to reverse course in the eight days available to it, Mr Roberts said he would pay to have police officers in all Super Value stores on January 1 to guard against a negative public reaction.

He warned that some Bahamians might refuse to pay VAT on the grounds they have been misled, and added that the ‘inclusive pricing’ issue still had not been settled to private sector satisfaction.

“We have hit the breaking point, the tipping point with these people,” Mr Roberts told Tribune Business, as relations between the Association and the Government appeared to freeze once again.

“They are trying to deceive the public, and will blame the high cost of VAT on us. We’ve heard many representatives from the VAT Unit on the local radio saying they’ve reduced duties by 7.5 per cent to compensate for VAT.

“We want to warn the nation that this is a total deception. Merchants are on board with VAT, but the poor consumers are being deceived,” the Super Value president and owner said.

“The consumers are the ones paying VAT, and they [the Government] have to get them on board; not deceive the public and blame merchants for the increased cost of VAT.

“The truth is that when the public come into the supermarkets in January, the prices will be the same as they are now, and nothing will have gone down. But 7.5 per cent VAT will be added to your bill.”

Mr Roberts’ complaints about misleading government VAT advertising were backed by Mr Beneby, who told Tribune Business: “They’re making these blanket statements, and giving the public the impression there will be a reduction on food items come January 1, when that will not be.

“It gives the public the impression a whole gamut of items has been reduced.”

To minimise VAT’s cost of living impact, the Government has announced numerous import tariff reductions on a variety of products, not just food.

And it has also altered the basis for calculating import tariffs, switching from the catch-all Cost, Insurance Freight (CIF) method to Freight on Board (FOB), a move again designed to lower duty payments and compensate for VAT.

However, the import tariff reductions themselves are far from being comprehensive and across-the-board. And, in the case of the food retail industry, Messrs Roberts and Beneby said the cuts had largely spared the products that generated greatest sales volume.

“The deception is that the Ministry of Finance have tweaked duties on three volume items by 5 per cent. Three volume items can’t bring down the cost of living on 35,000 items,” Messrs Roberts and Beneby charged.

Mr Roberts called on the Government to list the food items subject to import tariff cuts, and say what they had been reduced by. He identified ketchup, macaroni and cream as the three ‘volume sellers’ that will enjoy the 5 per cent cuts.

The Super Value owner emphasised, though, that these and other import duty cuts would not come close to offsetting VAT’s impact.

He described the other reductions as falling largely on “shelf decorations”, items that are considered relative luxuries or are slow moving, bought only once a month or year.

Suggesting that their effect would be relatively meaningless in the grand scheme of things, Mr Roberts told Tribune Business: “In the industry, 20 per cent of items represent 80 per cent of the volume. The majority of the items....., their tweaking does not amount to anything in bringing down the cost of food.

“They also removed the duty on freight. Well, 60 per cent of food store sales are bread basket, which is already duty free. On the other, 40 per cent of items - from 10 per cent duty to 30 per cent duty - it only amounts to minimum deductions of duty, and when you get up to 45 per cent duty there is a savings of 2.67 per cent, which are very slow items.”

Mr Roberts added: “The Retail Grocers Association estimates that the tweaking of duties will only bring down the cost of living by half of one per cent (0.5 per cent), leaving you to pay the increased cost of 7 per cent for VAT.

“It will take approximately three months for the half of 1 per cent to seep through the system. We average six weeks inventory, on which we paid high duty, and prices will be reduced by pennies on the reduced items as we reimport and reprice.”

Warning of the negative consequences if the Government persisted with its advertising message, Mr Roberts said: “I expect that if the Ministry of Finance doesn’t correct their radio communications and tell the public the truth, they are inciting trouble for merchants and themselves.

“It could come down to the public refusing to pay VAT because they have been misled... I’ve been trying to see Minister Halkitis all week, and tell him to tell the truth to avoid calamity.

“Why do they have to go out and throw us under the bus, and say it’s the merchants’ responsibility for stuff going up, when it’s going to be VAT. I have checked all of our wired insurance. I am expecting trouble. I will pay police to be in our stores on January 1.”

Mr Roberts pledged that consumers would be greeted on January 1 by in-store signs making clear that cost of living increases were due to the Government’s new tax, not the private sector.

Messrs Beneby and Roberts added that the Government seemed to have abandoned the private sector, which it seemed to no longer have use for, once it had assisted with modifying its VAT proposal and accepted its implementation.

“We co-operated with them, helped them develop this, and now they throw us under the bus,” Mr Roberts added. “They’ll be back to us, asking us to co-operate. Remember the ‘no’ vote. Don’t trust them.”

Comments

ohdrap4 says...

mr roberts is right.
the only items which duty reduced by 20% was stove and refrigerator, low volume and slow moving with 25 year expected life.

washers, with 5 year expected life stayed high

duty free stuff will be an automatic 7.5% increase. My blood pressure, diabetes and prescription glasses are automatically more expensive.

the warning poster has been displayed by kelly's at mall since late november

i stocked up on things but the dog food is gone from the shelves so i only have 3 weekes supply.

ketchup? ah ketchup will be cheaper.

but man does not live on ketchup alone,

Posted 23 December 2014, 1:43 p.m. Suggest removal

B_I_D___ says...

Pretty much sums it up...do NOT expect your over all bill to drop. Hey...Price Controlled items...that are usually duty free to start with...your 'bread basket' items...guess what...that price only has one way to move, and that is up by 7.5%...

Posted 23 December 2014, 2:53 p.m. Suggest removal

Hogfish says...

What the government also amazingly has kept quiet is that **VAT WILL ALSO BE CHARGED ON TOP OF DUTY!!**

So a tax IS BEING TAXED!!

These the most disgusting stink bitches of all time. smt.

Posted 23 December 2014, 3:27 p.m. Suggest removal

ohdrap4 says...

right
and to get vat free shopping is going to be a hassle with tourists giving up a receipt at the border
bahamians and work permit holders not eligible discrimination

Posted 23 December 2014, 8:04 p.m. Suggest removal

TalRussell says...

I am unable to decide if Comrade Rupert is correct or incorrect cause the Tribune never presented the government's spokesman's side? How much effort would it have taken to make a call for the reporter to present readers both sides?

Posted 23 December 2014, 3:44 p.m. Suggest removal

ohdrap4 says...

this reporter must indeed be incompetent.
when they raise the price of the corned beef, sue the tribune.
talruseel you need to subscribe to the internet and download the vat guidelines from the govt website

Posted 23 December 2014, 5:36 p.m. Suggest removal

TalRussell says...

Posted 23 December 2014, 6:52 p.m. Suggest removal

B_I_D___ says...

It's not just a super value, it's going to be the only value...tuna, grits and bologna...maybe we should adopt some Hawaiian SPAM and add that to our repertoire.

Posted 23 December 2014, 7:42 p.m. Suggest removal

TalRussell says...

Comrade BID how considerate of you share your cooking repertoire with our Tribune blog community.

Posted 23 December 2014, 7:50 p.m. Suggest removal

The_Oracle says...

No one seems to get this but VAT is being introduced because our Government, in wanting to join WTO HAS TO REDUCE DUTY RATES, but has until 2025 to do so across the board.
VAT is intended to replace the lost revenue, but does not preclude double dipping for a span of years.
Won't happen but they can hope.
The EU-EPA trade agreement, being a "super WTO" compliant trade agreement has already been signed, and already has preferential treatment aspect for signatory nations goods and services.

Posted 23 December 2014, 8:04 p.m. Suggest removal

GrassRoot says...

the only purpose of getting VAT implemented is to INCREASE revenue for the government. So why the fuss about reduced duty rates? that would OFFSET increased revenue. Government has no interest in reducing duty rates. Good times for corrupt customs officers.

Posted 24 December 2014, 2:45 a.m. Suggest removal

TalRussell says...

Posted 23 December 2014, 8:21 p.m. Suggest removal

TheMadHatter says...

The VAT will ensure that those who have been living off of our social system - buying duty free bread basket items, and paying no rent, no power, no car license, no insurance, and getting free clinics and free schools - will at least now have to pay something to the Treasury they have been raping.

It will also remind Bahamians that free clinics and free schools are not free. Now that they have to help pay for them, they might ask why are they open? Who is attending these institutions? Are they benefiting Bahamians to keep them up and running?

**TheMadHatter**

Posted 23 December 2014, 10:39 p.m. Suggest removal

BiminiHomeowner says...

And now Mr Roberts is throwing dozens of employees at Bimini Sands Resort under the bus!

Posted 26 December 2014, 7:21 p.m. Suggest removal

Log in to comment