By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister yesterday hailed the decision not to give candy and sugary drinks a 50 percent VAT rate cut despite the initial confusion this caused for food store merchants.

Dr Michael Darville, minister of health and wellness, told Tribune Business that the late move - which took retailers by surprise - is aligning tax policy with efforts to tackle The Bahamas’ chronic non-communicable diseases (CNCDs) crisis by encouraging consumers to switch to healthier foods without imposing any new or increased levies on them.

Pointing out that the VAT rate on candy and sugary drinks, such as original Coca-Cola and other sodas, is remaining at the original 10 percent, he added that cutting to 5 percent on all other edible foods will help drove “consumer behaviour changes” that benefit The Bahamas’ long-term health.

However, Debra Symonette, Super Value’s president, told this newspaper that the supermarket chain was yesterday afternoon still awaiting clarity on whether candy and sugary drinks were to attract the new 5 percent VAT rate or stay at 10 percent. The Government’s initial listing placed them among the products set to enjoy a 5 percent rate, but subsequent promotional material left them at 10 percent alongside prepared foods.

“I would say on the most part,” the Super Value chief said, when asked how smoothly first-day implementation of the new VAT food rate had gone. “There are some things that we need to clarify, so I wouldn’t say it’s 100 percent right. Items like that [candy and sugary drinks] we initially had in the 5 percent, so we’re now waiting to see whether or not we should have them included.

“We went by the original list we got. There haven’t been any actual changes, but there are still questions. People are wondering about sugary drinks. Are certain drinks included? We’re now not certain. I guess we’re just going to have to wait and see. All of the retailers are reaching out. We’re just waiting patiently between Consumer Affairs and the Prime Minister’s Office.

“Based on the original list that had the items by category they were included as far as we were concerned. That’s why the question is coming up.” As for the the remainder of yesterday’s implementation, Ms Symonette added: “There may have been one or two items that we found that should have been tagged that weren’t tagged, meaning they were identified in the system.

“As we discover those items we go back and put them in. Anything the customer points out to us we will adjust, but we’re hoping we captured the majority.” Ms Symonette said Super Value was now determining whether to re-price all products on store shelves, and in inventory, following the VAT rate cut’s implementation or just change the pricing on the shelves themselves.

“That’s a major task,” she added of product re-pricing. “We’re actually trying to decide now whether to go back to individual pricing or go with the tags. That’s a major decision we have to make.” Asked how much work it will require to re-price all products on Super Value’s shelves, she replied: “A lot. A lot. It’s many man hours.

“We would try to not let it go beyond a couple of weeks; a month or so. It all depends on how big a crew we have and man hours. We carry.. it could be between 60,000 and 100,000 items but, of course, many are changing. Maybe 80 percent of those are going to 5 percent because of all the edible items.”

Dr Darville, meanwhile, said the decision to keep candy and sugary drinks at the original 10 percent VAT rate was consistent with the strategy he outlined to tackle The Bahamas’ health and wellness crisis in tabling the Health Promotion and Wellness Bill 2025 in the House of Assembly last week.

Revealing that the Davis administration had been seeking to cut the VAT rate on edible foods for some time, but had only acted when it knew it could make up the revenue foregone in such a move, he added: “As you know, sugar is a poison. With chronic non-communicable diseases they are the culprit, and are very addictive. 

“If you go with a policy of reducing VAT, something to reduce VAT on foods, it doesn’t include sugary drinks and sweets and candies. Absolutely not. It doesn’t. That’s the main reason why our hospitals are full. Sugar is very addictive. We have to stay away from carbohydrates, sugars that have no nutritional value.”

Dr Darville said The Bahamas is now joining other nations such as Mexico, which he asserted has declared an “all-out war on junk food” because of the detrimental impact it is having on health. He added that the Bill tabled in the House of Assembly last week will seek to prevent foods containing carcinogens and certain trans fats from entering The Bahamas given the potential harm they can inflict.

“All these things are really to change behaviour,” the minister explained. “Ultimately, the revenue collected (from taxes on sugary, unhealthy products) will go to treating some of the complications brought on by lifestyle diseases. It’s aligning with my wellness policy but we’re not taxing anybody. We’re giving people options and hopefully they make better choices.

“This 5 percent reduction on food was to give Bahamians an opportunity to choose, but we did not increase the tax. The VAT on sugary drinks and candies, we left it where it was. There’s tons of information that has clearly demonstrated behaviour changes by increasing or decreasing taxes on foods that are bad for our system. If people choose not to pay the higher tax, we must give them alternatives.

“In this particular case, the reduction of VAT on foods, we wanted to do it a long time ago but did not have the financial headroom to do it and the Opposition kept talking about bread basket foods.” The Minnis administration eliminated VAT on such foods when it was in office, but Dr Darville argued that these - the likes of rice, sugar and high-fat creams - were the worst types to incentivise Bahamians to buy.

“They were the worst foods to try and reduce or eliminate the VAT on,” he said. “By keeping the VAT on other things we were redirecting Bahamians to areas that weren’t the best. When we had the financial headroom to give Bahamians options to make better choices we did it. We were not in a position to do it before because we needed to know where the revenue was going to come from. All these things we’ve been working on for two years.”

Vasco Bastian, the Bahamas Petroleum Retailers Association’s vice-president, told Tribune Business of the 5 percent VAT food rate’s implementation: “It was a smooth transition. Very, very easily. No significant hiccups at all. We had one or two items that did not go through, but we made the adjustments. Hopefully that will increase the traffic in the stations. Everything seems fine thus far.

“Everything seems to be running smoothly. I’m happy that the Prime Minister saw fit to do something like this. It’s good economic business sense for the gas stations and other retailers and consumers as a whole.”