By ANNELIA NIXON

Tribune Business Reporter

anixon@tribunemedia.net

Bahamian bakeries yesterday said they still fear an increase in their input costs from food stores increasing prices due to the VAT elimination on uncooked foods being treated as ‘exempt’ rather than ‘zero rated’.
Michael Turner, proprietor of Jumper Brothers Bakery, maintaining his stance that the move to eliminate VAT on uncooked foods was well-intentioned, said that with wholesalers and grocery stores unable to recover VAT paid on their input costs it is inevitable that they will raise prices. While he does not expect an immediate proce rise, he believes it will come eventually.
“I think that's a good thing. I don't know how long it will last but the wholesaler or the food store, when they purchase, they still have to pay VAT on it, so I really don't know yet,” he said. “I'm still watching with all anticipation to see how these prices are going to change based on that.
“I don't think it's going to change right away because persons already paid VAT on those things, and maybe to the cash drawer. I'm not sure how they're going to do it, but I don't think we're going to see it right away on certain products. But that's something I cannot speak to. That's something that we'll have to experience as time goes along and watch to see if it goes up or stabilises. We don't know that.
“So I'm hoping that it's a savings and not a hidden cost, where we're still paying for these products. But from what I understand, the wholesalers are saying that they have to pay VAT, or they have things in inventory they already paid VAT on, so therefore, anyone with good business sense will cover their end. So I understand.”
Shawnette Williams, owner of Something Sweet bakery, said she will also monitor price changes and compare receipts to determine whether she is truly saving.
“Prices have been extremely high,” she said. “So we are hoping that the VAT cut does help us quite a bit. We are hopeful for that. Like I said, we haven't really been to the food stores yet to see if the prices have increased, seeing that they removed the VAT. So that is something that we will be looking at on our back payments that we have made, purchases that we have made [compared] to the new purchases, to see if there's a huge difference.”
Kendrick Delaney, owner of The New Duff, added: “Any reduction in tax burden is always welcomed. The real impact comes down to whether those savings can be meaningfully felt, whether through reinvestment into operations, maintaining pricingor improving the customer experience.”
While the VAT elimination was introduced by Government as a means of providing financial relief to Bahamians, fuel prices have now increased and will possibly continue to spike as tensions in the Middle East continue. This has created another layer of financial burden for some Bahamians. Bernard Bodie, owner of Platinum Pastries and Deli, said having to transport and deliver his products with gas prices on the rise has impacted his business.
“Our business has been affected by the rising prices of gasoline,” he said. “We operate multiple ovens, supplied by large propane tanks, and are responsible for the transportation and delivery of our products, which has increased operational costs.”
Mr Turner said while his business does not offer delivery services for every order, he does deliver to his regular customers. He said he will also monitor how gas prices impact that portion of his business.
Both the VAT cut and rising gas prices are hitting bakeries as the Easter holiday approaches, which is one of their busiest seasons. Mr Turner said he has received some orders but is expecting a huge turnout during a last-minute rush.
“Last year, persons were coming in and we were running low,” he said. “I'm trying my best to stay ahead of the game this time, because sometimes they come that last minute rushing and it is not ready. They sometimes take long to come back. So we're trying our best to have more than what's been ordered already. So the persons walking in, they'll have access to the product right away.”
Ms Williams said Something Sweet Bakery has seen at least a 50 percent increase in hot cross bun sales this year compared to last Easter. Mr Bodie said hot cross bun sales have also increased for his bakery compared to prior years.
Mr Delaney added: “Hot cross bun season has been very strong for us as usual. What’s been especially encouraging this year is how it’s driving broader awareness of our full breakfast and lunch menu. We’re seeing more customers come in for buns and stay for sandwiches, coffee and other items, so overall we’re grateful to be busy.”