Sumner: Businesses absorbing VAT may have to rethink strategy
Some businesses have opted to absorb the extra 4.5 percent added on to the existing 7.5 percent value-added tax (VAT), explaining that they do not want to pass those costs on to their customers. But, Chief Executive Officer of the Bahamas Chamber of Commerce and Employers’ Confederation (BCCEC) Edison Sumner said with VAT now at 12 percent, he does not think that absorbing the tax will be a sustainable practice.
Sumner told Guardian Business that when the 7.5 percent VAT was implemented back in 2015, some businesses took the stance that they would not implement the tax in order to stay competitive.
“I don’t know how many businesses can seriously absorb 12 percent and stay in survival mode, that is putting a time bomb on your business,” he said.
“I don’t know how long you’ll be able to sustain that. At some point, given the fact the VAT is a consumer tax, it is supposed to pass through the business, at some point you have to consider passing the cost on to your consumers.”
Sumner said this practice happened mainly with services businesses.
Sumner said when VAT was introduced in 2015 some mom and pops stores that were making more than $100,000 – the required amount to be VAT registered and collecting and paying VAT – were not including VAT in order to remain competitive in the new tax environment.
However, Sumner said with utilities going up along with other costs, he does not know how feasible it will be for businesses to absorb the tax increase.
“I think many of them will have to rethink that strategy,” he said
Education: Florida International University, BS in Journalism
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