• Sector targets 45% items not reduced ‘since VAT’

• Co-chair: We have to fix ease of doing business

• Argues move would stimulate economy, taxes

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian retailers were yesterday said to be seeking a meeting with the Government to press for tax cuts on multiple high-tariff items and remove an “incredibly prohibitive” barrier to increased local commerce.

Tara Morley, the Bahamas Federation of Retailers’ co-chair, told Tribune Business she possesses “a whole spreadsheet” of tariff codes that have remained at 45 percent ever since VAT’s imposition more than seven years ago in 2015.

Asserting that none of these duty lines are intended to protect Bahamian manufacturers, she added that reductions would boost the retail industry’s cash flow, help it remain competitive with Florida and online rivals, encourage more spending in the local economy and relieve some of the burden on consumers from the recent surge in imported inflation.

Ms Morley argued that increased transaction volumes, and more money circulating in the Bahamian economy, would also enable the Government to make-up for reduced tax rates via the greater volume of economic activity.

“There are a number of goods that have remained at 45 percent import duty and never received a reduction since the implementation of VAT,” she told this newspaper. “It would be beneficial at this point to re-evaluate some of those higher duty rates to counter some of the inflationary pressures for local consumers, especially where duties have not received a reduction since VAT came in.

“There’s quite a number of codes where that’s the case. There’s quite a lot that are not protective measures, they are not goods manufactured in The Bahamas, and which are quite high and never received a reduction.” Consumers, Ms Morley added, were now being hit with inflation on top of 10 percent VAT and tariff rates of 30-45 percent on such products.

“I have a whole spread sheet of them,” she added. “We reached out to a bunch of member businesses, and there is a list of them which we think should be considered for a duty reduction. If more people spend at home, that has the beneficial impact of generating more income in the Bahamian economy, generating more jobs, stimulating more demand locally and more money circulating locally as opposed to always looking abroad for goods.

“The more internal demand we can stimulate, the better it is overall for the economy. Duties are an incredibly prohibitive tax because it requires businesses to bear the burden of tax prior to selling a single item. Not only is it a hindrance on cash flow for existing businesses, it’s a large hurdle for entrepreneurs and anyone looking to start a business.”

Tribune Business revealed earlier this year that the Government has asked the private sector to provide a list of potential tariff cuts it could implement in the upcoming 2022-2023 Budget as a means to offset some of the inflation pressures being felt by Bahamians, although it will have to balance this against its revenue needs amid the ongoing debt and fiscal crisis.

Ms Morley, though, said the retail sector wanted to meet directly with the Government itself. “They need to make a decision on what is best overall for the economy,” she told Tribune Business. “We strongly believe a part of that solution is facilitating the ease of doing business, which includes alleviating the burden of high duties in the country.

“Currently we have a ton of people bringing items in in suitcases, they’re smuggled in on boats etc, so there would be more revenue to be captured at home. Why wouldn’t you at least consider that as an option. Given that VAT is considered to be an extremely effective tax for the Government, this [tariff cuts] could be a way to stimulate additional retail sales overall.

“It’s just at this point that we really need to start trying to fix the ease of doing business in the country, and this is such a major overhead for so many businesses to have this stress on cash flow with high import duties. Before they’ve sold a single good they are paying 50 percent on top of the cost of the good in duty and fees,” Ms Morley continued.

“It isn’t fair to the business community, it isn’t fair to the consumers, and turns a lot of business away from being spent locally. If we are able to grow business at home, stimulate the economy in that way, in many spaces it will stimulate future entrepreneurs to expand into that space, reduce the hurdles of opening a business with high upfront costs, help NIB contributions, get more people employed by reducing the cost of managing and operating a business in The Bahamas. It all ties together.”