Brash: Repricing, a one-off cost, no big deal

Tue, Dec 16th 2014, 12:00 PM

An international value-added tax (VAT) consultant yesterday addressed several concerns of The Bahamas' retailers, stating that VAT is a "very, very simple" tax for the sector.
New Zealand VAT consultant Don Brash told Guardian Business that he does not understand the concerns of some retailers over the timing of the tax's implementation, stating that, if anything, retailers could benefit from the coinciding of the January 1 introduction date with the traditional sales season.
"Retailers want big sales in December for the Christmas period. What better way of getting good sales in December than to tell consumers that prices might be going up in January?
"For retailers this is a very, very simple tax. Everything they sell or buy is taxable. Calculating the VAT that they have to pay to the government is therefore a very simple calculation, which should be a matter of minutes, not hours, for them to do the calculation," said Brash.
Brash also addressed the retail sector's objection to VAT-inclusive pricing, stating that the extensive repricing of goods is a one-off cost and the government's allotted transitional pricing phase provides sufficient time for retailers to adapt.
"It's a one-off cost. Many retailers have a quite high retail turnover so the goods that would have to be repriced if they're held for a long time don't have to be repriced if they're sold out quite quickly. I don't think it's a big deal," said Brash.
He referenced the government's planned transitional period for large retailers providing VAT-inclusive pricing, which is expected to last until the end of February.
Brash noted that New Zealand retailers were required to provide VAT-inclusive pricing, while businesses selling only to other businesses typically utilized VAT-exclusive pricing.
Given the government's decision to switch from calculating import tariffs from the previous cost, insurance and freight (CIF) method to the free on board (FOB) method, Brash argued that the prices for quite a few goods would be reduced following January 1. The FOB method is expected to lower landed costs for certain imports in a effort to ease the tax's impact on some retailers.
VAT will be implemented at a rate of 7.5 percent on January 1, 2015.

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