Friday, January 23, 2015
By RASHAD ROLLE
Tribune Staff Reporter
rrolle@tribunemedia.net
VALUE added tax should not be solely blamed for rising costs of goods and services, VAT education task-force Co-chair Edison Sumner said yesterday.
Mr Sumner said some businesses that recently registered for VAT have faced business compliance costs in recent months that might have prompted them to raise their prices.
“Many people have been calling and asking and saying they believe some merchants have been gouging prices,” he said during a press conference yesterday featuring members of the VAT task force.
“It’s a common thing that we’ve heard in the last couple of weeks since VAT was implemented. Let me say that while we expect and hope that the merchants who are benefiting from the reductions in customs duties on a number of items and who are also benefiting from the fact that they no longer have to pay customs duties on their freight payments and insurance costs, that they would be able to pass those savings on to their customers.”
“But I would like to also say that the merchants who have adjusted their prices, would’ve made adjustments to include VAT now which is not a cost to their business operations but is an ancillary cost that’s being passed to the consumer. But we also want to make note that…many businesses who have had to apply for VAT registration, for a period of time they were operating without a valid business license. For them to be able to register for VAT they had to apply for a business license or they had to renew the business license that was delinquent. That represented costs to them that really should’ve been paid all along. It was allowed to accumulate and now they find themselves having to pay back costs.”
“There are other costs of doing business that would’ve caused some businesses to marginally increase their prices in line with the generally increased cost of doing business,” he said.
“So we want to make it clear that the merchants who are raising their prices and saying that the prices are being raised just because of VAT I think is in error. “There are maybe other costs affiliated with businesses having to raise their prices so we cannot blame the increase in the cost of doing business generally only to be the cause of there being an addition of VAT. There may be other attendant costs but we cannot put the entire blame on just VAT. We want to be sure that the consumer understands that VAT is not the sole cost of businesses having to raise their prices in 2015. There are other issues that may have risen over the past two months that may have caused (price increases).”
Meanwhile, Jasmine Davis, co-chair of the VAT education task force, told the press “most businesses have been compliant and have successfully implemented VAT to assist with reducing the government deficit”.
Ms Davis said “hundreds of letters” have already been issued to businesses for “infractions” associated with VAT’s implementation.
“The infractions can range from minor to very serious but we can’t necessarily say what the numbers are.”
VAT was introduced at the rate of 7.5 per cent on January 1.
Comments
duppyVAT says...
Sumner ............. STFU. You just another sellout like Gowon Bowe who brown nosing this wutless PLP government.
The business community like most other entities and politically connected persons are complicit in not payng the existing taxes ............ this has led us to where we are today.
We dont need VAT. We need honest taxpayers, businessmen and citizens who are willing to pay their way and not ride the political coat tails at the national public's expense .. and fiscally prudent Ministers who are not tempted to waste taxpayers' money.
Posted 23 January 2015, 2:13 p.m. Suggest removal
Economist says...
It was never going to be just 7.5%. Last year the Business License fees went up for almost every business. Some businesses had increases of close to 100%. What the Government did was to say if you are running three businesses the tax for each business won't be based on that business but on the combined sum of all the businesses.
That meant that if you paid 1/2% on gross for one business, the year before, it could be 1% or more with the new system, when the total gross was added for all the businesses. This effectively doubled the License fee for each business.
Then Customs has gone up on its charges. Permit fees have gone up, in other instances. Cost of managing Vat is an additional cost. None of theses cost are Vat detectable.
Now put 7.5% on all those increases. Reality is that the primary cause of the 10% to 12% increase in the cost of living is the Government.
It is just how it is. Government keeps spending and we, the people, have to pay for it.
Posted 23 January 2015, 2:30 p.m. Suggest removal
ThisIsOurs says...
In other words they devalued our dollar. We can only use it here and it buys less of everything even healthcare. It costs more to convert it too. It's devalued. I'm completely lost why PGC is Minister of Finance. A man who shown he knows nothing about banking procedures or factors that affect financial systems is the final say in how money is used in this country. It's completely unbelievable
Posted 24 January 2015, 12:22 a.m. Suggest removal
The_Oracle says...
Blanket statements are dangerous and misleading, and have the potential to cause serious animosity between merchant, Consumer and Government which will do nothing but destroy economic confidence.
While I am sure Some merchants have raised margins, it can have three reasons:
Ignorance, on how VAT works, Gouging or raising margins for no reason but increased profits,
and raising margins due to border line profit pre VAT.
Each must be dealt with on a case by case basis, and market forces, being consumer purchasing power, will help with that.
Unfortunately our food chain is controlled by a relative few entities, which is where I have seem the biggest increases both PRE and post VAT.
I have also seen the reduction of prices due to the duty rate drop exceeding the VAT adder of 7.5% but not in food stores.
I also believe the Government is in for a nasty surprise once they get the data on the margins required to stay in business in this country and the costs of overheads, theft, utilities etc.
Remember, the Government wants and needs more money, endlessly, to pay for all of their promised "Free stuff" Lacking foreign investors to pillage means Bahamians are the target.
Just as consumers can vote daily with their dollars, so can the business entities.
Posted 23 January 2015, 2:48 p.m. Suggest removal
duppyVAT says...
Yep Oracle........... the Americans/Canadians/Europeans grew tired of corrupt Bahamian leaders creaming off FDI contracts and protested. The French company got screwed fooling around wih BEC contracts. Will the Chinese be as accommodating to the political scammers????? Only time will tell. The pickings are slim for the crooked politicians looking for sweet FDI deals.
Posted 23 January 2015, 3:07 p.m. Suggest removal
Hogfish says...
Interesting how it is never mentioned that vat is charged ON DUTY!
so a tax is being taxed.
Posted 23 January 2015, 3:43 p.m. Suggest removal
The_Oracle says...
Yes, VAT is levied at import on FOB cost and Duty.
Duty for the purposes of Government in this case is conveniently re-named "A Value added" as Merchants/importers for resale have always considered duty as a cost of goods.
In the case of the merchant, rightly so, as duty is paid up front and recouped when and if sold.
In the case of Government, not so straight forward, as Duty to the treasury is a tax to be collected, and it is a % of the cost.
Sadly, none in the private sector either individually nor collectively have the balls to seek judicial review for the definition and dual taxation.
Mind, with the state of the courts, would a ruling ever emerge contrary to the government position?
After all, the Government pays their salaries.
Posted 23 January 2015, 5:35 p.m. Suggest removal
TheMadHatter says...
Excellent point about the duty etc. - but allow me to remind you that our Constitution does not allow us to say anything disparaging about the Courts. Please be careful in this regard. You could end up prosecuted for such statements.
As a result, whenever the issue of Courts and their activies comes up with me - I always tell people that here in the Bahamas we have one of the best court systems in the world. They do an excellent job, and I would not be surprised if other countries often liase with our officials here and visit to take notes and learn from their excellent performance in this field.
**TheMadHatter**
Posted 24 January 2015, 9 p.m. Suggest removal
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