By Ryan Gilkes
The government’s announcement that there would be no VAT-free holiday this year has not come as a surprise for some of the island’s leading business figures.
Just after midday on Tuesday, the Barbados Government Information Service gave notice that the day, highly anticipated by consumers, was a no-go.
“Due to numerous social media campaigns and other media commentary which have contributed to heightened expectations of a VAT-free Holiday, potentially leading to a slowdown in actual economic activity, the Ministry of Finance advises the public and the business community to conduct their business with no such expectation,” the statement said.
Chairman of the Barbados Private Sector Association (BPSA), Trisha Tannis told Barbados TODAY the decision was not unexpected, considering economic constraints. But she suggested that the timing, only days before Christmas, countered the original goal of stimulating economic activity, causing an adverse effect.
Tannis said: “You must appreciate the BPSA, as co-chair of the BERT (Barbados Economic Recovery and Transformation Plan) Monitoring Committee, is very well aware that the government certainly could not afford to sustain [it], at least not to our observation with the information that we have available to us. It would not be in a position to sustain this sort of initiative on an annual basis.
“As it relates to the impact on business . . . timing is everything. I think the announcement that it was not going to be continued this year, having come essentially five days before Christmas, has essentially had the opposite effect that the initiative was originally designed to achieve, which was to generate economic activity.”
The BPSA leader pointed to the impact of widespread anticipation fuelled by fake news on social media, stating that earlier notice could have prevented negative repercussions on the retail and distribution sectors.
President of the Barbados Chamber of Industry James Clarke.
“Whilst we appreciate the rationale or the suspected rationale behind this lack of a VAT-free day, we did not anticipate it. We would have preferred that such notice [could] have been given a few days earlier . . . so that the country would have known not to anticipate and it would not have negatively affected the retail and distribution sector,” Tannis said.
For Eddy Abed, managing director of Abed’s, the absence of a VAT holiday is a major disappointment. He cited the previous successes of the initiative in attracting consumers and boosting sales.
He told Barbados TODAY: “Many of our customers were waiting for this event, and now that it’s not coming, it’s going to impact us, it’s going to hurt us. We’re collectively, as a business community, trying to come up with other options, other types of means that we can motivate our customers to come out.
“Because the basics remain – we all still have inventory, we all still need to sell, we all want to end on a strong point for the year. So it has been very, very disappointing that it’s not going to come this year.”
Abed, a former Barbados Chamber of Commerce and Industry (BCCI) head, has urged the government to consider an annual VAT-free day.
“Retail businesses are built around events. Whenever there is a bank holiday weekend, Christmas, Easter, or whatever event, people tend to shop for that event. And having a no-VAT day would serve specifically to solidify that frame of thinking that knowing that day, you’re going to get a discount . . . knowing that retailers have the largest selection of inventory before Christmas.
Managing Director of Abed’s and former BCCI head Eddy Abed.
“It’s disappointing that we don’t have it this year, but all is not lost. You know, retailers have to be creative. They have to go about now finding a means of motivating people to come out. You will see discounting occurring between now and Christmas. I’m convinced of that. There’s a lot of inventory in the system. It’s a great selection.”
But James Clarke, the BCCI’s current president, told Barbados TODAY that making the VAT holiday permanent would require more investigation on its impact, not only on consumers and businesses but also on the government.
“That merits some more digging and research to find out how much does it cost the government for that day? And what does it do to the sales in businesses in general? What do those numbers look like?” he said.
“And then, we’d be able to comment more. Other than that, it’s just kind of again, it’s kind of speculative, without knowing what the real impact of it is.”
He noted that the VAT savings on the day tended to affect high-value items. As a result, in the days leading up to today’s announcement, some of the chamber of commerce’s members were already noticing a slowdown in business in anticipation of the VAT holiday.
Clarke said: “People [were] select[ing] what they wanted, but [were] planning to come back on the day, if it happened, to buy whatever it was they were going to buy. Not everything, but certain high-value items would fall into that category. For example, anything to do with home, so building materials, appliances, electronics, that type of thing.”
“So every year, the members prepare…. [Those] who are in the retail sector have their own marketing and sales plans and so on . . . which they execute, regardless of whether there is that VAT-free day or not.
“[Whether everything is on course for a regular Christmas retail season,] that is speculative. I don’t know if stores are going to be running specials. Maybe they have specials already to try to encourage sales. It all depends on what your marketing and sales plans are for the month. Like I said, the day is not a given,” Clarke added. (RG)
