THE REALITY of the VAT hike has not hit home to Barbadian consumers, says a top businessman.
And he’s warning that the full force of the 2.5 VAT?increase will be felt in the New Year.
“It will only be when people start to feel it in their pocketbooks . . . there are going to be effects and I expect in the New Year we will see what those effects will be,” cautioned Andy Armstrong, president of the Barbados Chamber of Commerce and Industry, while speaking at a Democratic Labour Party’s lunchtime panel discussion.
Armstrong said yesterday that consumers were presently being shielded by businesses that were absorbing the VAT hike, but he suggested this situation would soon change.
Referring to an article in the MIDWEEK NATION about some stores reporting steady sales for Christmas shopping, Armstrong explained that there were practical reasons why stores absorbed the 2.5 per cent VAT during December, the busiest shopping month.
He noted that one of those reasons was because they could not all change the prices on all their items before the end of last month.
“They had to change the prices on thousands of items and they only had November 30. Physically that would have been impossible to do it. If they did not then they would be in breach of the law.
“I think a lot of them also looked a little further down the road and they realised that on items that carry an environmental levy, once the new stock comes in they would not be paying that environmental levy, so the base cost would go down depending on how much the levy was. But in those cases the price on the shelf should pretty much come back down to what it is now. So I think they decided it was easier to take a hit in the short term,” said Armstrong.
Chartered accountant Peter Carter, also speaking at the discussion yesterday, said that the 2010 Budget had sent a strong signal that it could not be business as usual in Barbados.
“My sense is that since this Budget there has been a lot of interest in the way we are going as a country and what we can and cannot afford,” he said.
Carter said he believed the Government had to do something and that raising prices was a reality of the world which Barbados was a part of.
“I would also like to suggest that one of the things we need to bear in mind is that Government was not in a situation where it could just sit and do nothing. The reality is that we have
a fiscal deficit. We have high debt. We are faced with a recession worldwide, such that some of our major trading partners can no longer produce for us the kind of revenue that they have done in the past,” he said.
“Government borrowing capacity is limited at this point . . .” he continued. “Government has to do two things: raise some of its revenue and cut some expenditure,” he said.
Carter added that some areas of the Budget would bring about an increase while some would “compensate” and it was time for Barbadians to take an interest in what was happening. (MM)
