Wednesday, February 16, 2022
APPARENTLY, Bahamian consumers are on the wrong end of a markup system not designed to benefit them. Who could have guessed?
Perhaps it may have dawned on more than a few of us as we look at the prices while we go shopping and compare them to the prices we might see elsewhere. Perhaps it might have occurred to us when we packed our bags with purchases during visits to Florida on shopping runs rather than paying out in our local store. After all, if you can save money while adding the cost of a flight and a hotel to your shopping, something isn’t adding up somewhere. It doesn’t take Sherlock Holmes to solve this mystery.
So while we welcome the comments of former Price Control Commission chairman Danny Sumner, we would have appreciated a bit more determination to tackle the problem – or be more forthright in his comments on it – when he was still in that post.
Take a walk along the aisle of many stores and the problem is right in front of our eyes, literally.
We have seen ourselves products such as an English pie marked with £1.99 (about $2.69) on the tin, and yet a $10 price tag above it. Bear in mind the price marked on the tin takes into account the supposed markup, and import and duty don’t account for all that difference.
What we should point out, however, is that this is nothing new. High markups on some products were happening in Mr Sumner’s time, they are happening now.
There is a collection of different issues affecting prices. Inflation is part of it. The global supply chain issues are another large part of it with shipping companies prioritising high value shipments over others. An increase in oil prices is another. What excessive markup does is exacerbate these issues.
You know what you pay at the grocery store normally – and you can feel the pinch when spending $100 doesn’t get you what it got you three months ago, even taking into account the return of VAT on breadbasket items.
There are some areas where we can be aware as customers, and be ready to take our business elsewhere if someone overcharges – but there are others such as grocery stores where we need the Price Control Commission to be vigilant. Can we work together and hold a meeting to come to a solution to minimise the pricing, as Mr Sumner suggests? Perhaps, perhaps not – but it would certainly be worth trying.
Minimum wage
A recommendation on a minimum wage increase could be submitted within a month, it is reported – and it brings a tough choice for Prime Minister Philip “Brave” Davis.
On the campaign trail, he was promising an increase to $250 a week, but with money tight in both the private and public sector, it will be interesting to see if he sticks with that.
Then again, with prices on the rise, anything less might barely shift the bar on living standards from what it has been.
As ever, there will be the question of what the government wants to do, and what the government can afford to do. Fall short of that election promise, and Mr Davis might have some unhappy supporters to answer. Spend money we don’t have, and we might see job losses or an increase in the deficit.
Still, a pandemic would not have been the circumstances any of us would have wanted while these decisions were being made.
It’s easy to promise on the campaign trail, now Mr Davis has to show what he can deliver.
Comments
bahamianson says...
A case of hand sanitizing gloves from $50 to over $100 for vinyl gloves. Let us not talk about nitrile gloves for $265 for a case of gloves. This is ridiculous!!!!
Posted 17 February 2022, 10:16 a.m. Suggest removal
tribanon says...
The government's failed economic policies will soon be forcing many Bahamians to use sea grape leaves to wipe their butts with after taking a good dump. But the cruel likes of Davis and Cooper will always be able to afford the finest soft fragranced Charmin to wipe their own butts with.
Posted 17 February 2022, 10:33 a.m. Suggest removal
LastManStanding says...
Again, what do people expect merchants to do? Run their business at a loss? We literally import everything that we consume, what are stores supposed to do if inflation is taking it's toll abroad?
Bahamians wanted to ride with Biden, so they are getting what they wanted. Here's your inflation and a free crack pipe to go with it.
Posted 17 February 2022, 10:58 a.m. Suggest removal
ScullyUFO says...
Yeah, Biden needs to use those levers in the oval office. The one's marked "Gas Prices" and "Inflation Rate". Trump says Biden's too stupid to use them.
Posted 17 February 2022, noon Suggest removal
LastManStanding says...
Inflation now is going to be a joke compared to when Build Back Better comes into full swing. Bahamians had better buckle up because this ride isn't ending anytime soon.
Gas prices are only going to get worse as long as Biden tries to provoke a war with Russia as well. It is a big reason that the Western European nations are trying to bring about an amicable end of the crisis in the Ukraine, many of them are dependent on Russia for energy needs (Germany in particular).
Posted 17 February 2022, 2:39 p.m. Suggest removal
ohdrap4 says...
The only thing larger merchants could do is not to mark up the vat, as they get vat back.
The smaller merchants who get a portion of the vat back could exclude that portion.
Let's say:
$1000 CFI
$ 300 customs duty
$ 130 vat
$ 170 broker
1600.00
markup 80%
Sell for 2880
But, since you get the vat back
your out ot pocket becomes 1470
markup 80%
sell for 2646
That is all one can do. and I think some larger merchants do that already. Many do not, but I do not patronize these establishments.
I do not understand why govt will "talk' to the merchants unless they are prepared not to charge VAT on top of duty to further reduce the thing.
Posted 17 February 2022, 12:30 p.m. Suggest removal
TigerB says...
So then... if minimum wage was to increase, and it seems it will. will that drive up prices even more? Just thinking out loud.
Posted 17 February 2022, 2:16 p.m. Suggest removal
The_Oracle says...
Firstly, VAT is a compound tax at import, as it is levied on the duty as well as first cost.
VAT is not marked up, but duty when prepaid can be. (it is a cost of goods)
It is illegal to mark up VAT.
Aside the above, One could say why doesn't Walmart, Target, Costco etc come over and sell their stuff cheaper? Two reasons. They would be subject to our high overheads, costs of doing business, taxes, Money exchange costs. We are also a small market, which however spends over $2.11 Billion with them in Florida alone, annually (2010 numbers) We bring cash, and incur all transport costs and import taxes ourselves. Why would they establish themselves for the market share they already get?
This is by no means a simple problem with a simple fix. What government has to create is a win win win. Businesses win, customers win government wins.
Posted 17 February 2022, 3:09 p.m. Suggest removal
ohdrap4 says...
It is illegal to mark up VAT.
Is it? Where do I report? I know for sure of some places that markup vat, ie. included as landed cost and multiply by 1 point whatever.
But since the items are not price controled they can just state they marked up by a higher amount.
Posted 17 February 2022, 3:50 p.m. Suggest removal
Dawes says...
Its not illegal to mark up VAT as you can mark up items however you want (except price control). It is silly however as you can claim the VAT back (if you are VAT registered) and effectively you are making your price higher then it should be, which a competitor should be able to undercharge. Now if you are not a VAT registrant then you would markup VAT as you are not getting it back. But then you aren't charging VAT either (and you should only be doing about $100,000 a year in sales).
Posted 17 February 2022, 4:51 p.m. Suggest removal
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