Government’s vexing National Social Responsibility Levy (NSRL) which took effect almost a week ago continues to hang like a cloud of confusion over some retailers, as there appears to be a split among major bakeries on how to apply the tax.
While the island’s largest bakery, Purity Bakeries, has gone ahead and applied the increase to some of its products effective July 1, the same day the levy took effect, at least two of its major competitors have refused to follow suit, stating they were awaiting clarity or further assessment.
One of them is Zephirin’s Bakery Inc, the island’s second largest bakery, which said it was still awaiting clarification on the matter from the Barbados Revenue Authority (BRA).
Since the NSRL climbed steeply from two per cent to ten per cent from July 1, the BRA has sent out correspondence to stakeholders, a copy of which was obtained by Barbados TODAY, seeking to clarify how the tax should be applied and on what items.
Marketing Manager of Zephirin’s Bakery Inc Kevin Waithe said his company was one of those still awaiting further clarity from the revenue collection agency.
Minister of Finance Chris Sinckler had announced at the end of June, following talks with industry leaders, that the controversial tax would not be applied to the “basket of goods” that did not attract the Value Added Tax (VAT).
This means some baked products including sandwich loafs, salt bread, hamburger buns, hotdog rolls and other “unsweetened breads” would not attract the levy.
“It wasn’t clear on how to do it. Nobody really knows how to do anything right now. So we are waiting and working with the revenue authority to see where we go from here,” Waithe told Barbados TODAY in an interview this afternoon.
“There is a document from the BRA that is a bit unclear on what is supposed to be done. So we have been discussing with them exactly how it is to be applied because based on this document it gives the impression that the rise is not to go on to pastry products. So that is still being deliberated. So we are just waiting on them to be able to clarify for us so we would know how to proceed in changing or adjusting our prices. So we are
still assessing it before we do anything,” he stressed.
However, in an emailed response to questions posed by Barbados TODAY, Sales and Distribution Manager of Purity Bakeries Christopher Symmonds said the correspondence from the BRA was clearly understood by his company and perhaps some bakeries were holding off on increasing their prices because they were awaiting his company’s price list.
“All the critical clarifications have been provided. Perhaps some producers may be waiting to see Purity’s price list before setting their price. We would not care to speculate, but if so, it would not be unusual,” Symmonds said.
He said the company was “required by law to collect on behalf of the Government, the NSRL on goods which we produce and sell locally and pay these funds over to the BRA.
“Point being that our on-hand inventory of raw material is irrelevant in the context of NSRL. We have to collect from our customer from July 1, as it is a liability owed to BRA,” Symmonds explained in defending the company’s immediate price increases.
“There has been no emphasis on the upside. Purity and Wonder branded sandwich and pan loaves, which for decades have been favourites among Barbadians across all walks of life and are essential to families feeding themselves nationally, have not increased in price,” he added.
Meanwhile, Managing Director of Nicholls Baking Company Inc McDonald Nicholls told Barbados TODAY he was considering increasing his prices but had also held off on doing so, given the need for “careful assessment” before any decision was taken.
“We are getting ready to do price increases and we are studying it very, very carefully, and very shortly we will reveal to the public what our price increases will look like,” he said.
When asked if an increase at this time would not be considered premature given the need for clarity, Nicholls explained that the increases would be warranted once the suppliers increased their prices. However, he gave the assurance that any price hike would take into account the hardship facing the population.
“One of the things you have to realize is that bakeries do not have the luxury of raising their prices whenever we get raw material and price increases. And we get that consistently,” Nicholls said, pointing out that a ten per cent tax was “sizeable”, and therefore could not be absorbed by companies.
“So we are taking [a number] of factors into consideration – how much can the consumer bear? That is the reality because if they cannot handle the increases they will reduce their ability to purchase more of our products,” he said.