By JADE RUSSELL

Tribune Staff Reporter

jrussell@tribunmedia.net

AFTER slashing VAT on grocery items from ten percent to five percent earlier this year, Prime Minister Philip “Brave” Davis has announced additional tax relief, this time on essential products such as medications, feminine hygiene items, and baby diapers. The new VAT rate of five percent for these goods will take effect on September 1.

During his 2025/2026 budget communication in the House of Assembly yesterday, Mr Davis said global inflation has led to rising prices worldwide, including in The Bahamas. He highlighted the financial strain Bahamian families are facing due to the increased cost of food, household items, and basic hygiene necessities. He said his administration remains committed to easing these burdens. 

The VAT reduction will apply to a range of products, including baby diapers, adult incontinence products (such as Depends), feminine hygiene items, and both prescription and over-the-counter medications, including those used to treat chronic conditions. It will also apply to medical and dental supplies such as needles, blood pressure machines, lancets, dental cements and fillings, and other therapeutic products like cell therapy items. 

Mr Davis said the upcoming cuts are intended to ensure people at all stages of life have access to essential goods without the added burden of high taxes.

Amendments to the VAT Act will also extend VAT relief on building materials for religious institutions. These institutions will be eligible for VAT-exempt imports or refunds on local purchases. Customs duty will be removed from digital and changeable letter signs to help organisations improve their communication and visibility.

Duty will also be removed on essential construction items such as refractory cement, mortars, concrete, copper fittings, screws, nuts, and bolts. Reductions in customs duty will apply to cleaning products, electric or battery-powered shavers, juice extractors, trucks weighing 20 tons or more, and various types of filters, including those for water and air conditioning systems.

Mr Davis also announced the removal of the 45 percent excise duty on butane fuel, noting its regularly used in portable stoves. He explained that many Bahamians depend on this fuel to prepare meals daily or during emergencies.

In line with efforts to support renewable energy and climate initiatives, duty exemptions will be granted for household appliances with the highest energy efficiency ratings. This includes freezers, air conditioners, and gas and electric water heaters, provided they meet the criteria set for environmental impact. Additionally, prefabricated homes may now be imported with prior approval from the Ministry of Works.

In January, Mr Davis announced that the VAT on all food items sold in food stores would be reduced from ten per cent to five per cent, excluding prepared foods in deli sections. He described the measure as an effort to provide immediate relief to struggling families.

This marked a policy shift for the Progressive Liberal Party (PLP), which has traditionally supported a low-rate, broad-based VAT system with minimal exemptions, a structure often praised for its simplicity and efficiency.

At the time, Free National Movement (FNM) leader Michael Pintard said the reduction did not go far enough. He said the FNM would renew efforts to remove VAT from healthy foods and reiterated calls for its removal from breadbasket items, medication, and feminine hygiene products.