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Confusion as new VAT system kicks in
There was some confusion over the price of sardines, which doesn’t carry VAT, some upset over the 12.5 per cent VAT, some stoicism and resignation, as well as acceptance, among consumers yesterday in downtown Port-of-Spain as the new tax structure for food items took effect.
Consumers were still grocery shopping in several downtown areas yesterday but the VAT issue was clearly uppermost in mind.
Government announced on January 11 the imposition 12.5 per cent VAT on a range of goods which were previously tax-free and subsequently passed legislation concerning the VAT implementation. It also reduced VAT from 15 per cent.
After one downtown supermarket put a new price, inclusive of VAT, on sardines, Finance Minister Colm Imbert stressed sardines did not carry VAT.
He said: “The new schedule of zero-rated items (Schedule 2), dated January 29, 2016, is the same as the list published on the ministry's website on January 11, 2016. The legal notice is attached and you will see clearly that item one(k) on the zero-rated schedule is ‘sardines.’ Clearly, therefore, sardines are not subject to VAT.
“Further, for clarity, if an item is not on the schedule of zero-rated Items, then it is subject to VAT at 12.5 per cent.”
Asked by the T&T Guardian what could be done regarding operators who put VAT on items which Government left on the zero-rated list, Imbert said: “There is no list published anywhere with sardines subject to VAT. I don’t know where they would have gotten that information from.
“What list are they using? I get the feeling they are not bothering to check the actual list for themselves and are relying on some third party to do the work for them.
“As I said before, it's a free market and the only way to deal with profiteering is to publish these things so that consumers can make informed choices.”
As for consumers making choices, the Jacob family of Laventille— pensioner parents and their daughter, a single mother—are now contemplating what choices they face after doing their fortnightly grocery shopping at a western Port-of-Spain bulk-buying outlet and a downtown grocery where they usually shop.
Showing the T&T Guardian, items in their car trunk from the two places, mother of two, Tracey Ann Jacobs said: “It is terrible. The place where we bulk buy raised prices on the items we bought—packs of tuna, et cetera—by $10.
“All in all, the 24 items we bought there came up to $1,314.07 and these are basic items, meat, et cetera, no fancy stuff.”
The grocery bill from the Port-of-Spain grocery was $311. Jacobs’s mother said the bill is usually about $200.
Jacobs’ father, also a pensioner, said: “I call this price increase steep, almost $150 per cent... it’s difficult to cover it.”
A 33-year-old, who gave her name as Melika, of Laventille, said she had no children but a big family. Holding her grocery bag, she said: “The prices are a little higher, not all seem to be changed but it’s challenging in this economy.”
Eddie Joseph, a pensioner and father of an unemployed son, holding two bags said: “Certainly things going up. I saw prices increases. I’ll just have to make out. If I buy two pounds of something, I might have to cut it to one pound.”
Alicia, in her 20s of Morvant, said without hesitation: “Prices are still reasonable. I just have to look at what I’m buying a little more.”
Allyson Moses, of Diego Martin, said: “The prices are kinda the same with some items but are things I really need.”
Karen, of San Juan, in her 30s, toting her bags, said: “Things gone up a little more but it will still take away from my salary a lot.”
Price listing challenge
At least one downtown grocery owner admitted there had been some confusion over the VAT implementation. He said they had wanted closer consultation with Government on the issue to go over items. He added it was a bit of a challenge in-house to put the new prices on items.
Imbert also confirmed there had been a complaint from a retailer that Government had not published the legal notice identifying the new list of standard-rated items, items that are subject to VAT.
“I'm taken aback that although the VAT system has been in force for 28 years, there are retailers in T&T today who do not know that there is only one schedule/legal notice with zero-rated items in the law, and that anything that is not on the schedule of zero-rated items is subject to VAT. What has been going on all these years?” he asked.
But Opposition MP Barry Padarath, who toured supermarkets in Princes Town, Couva and Trincity, also noted negative feedback in most areas.
“Government is creating a permanent underclass in society. The poor is getting poorer and losing purchasing power,” he said.