VAT Inclusive Pricing: A Bad Move For All, Especially Consumers

Consumer Action BahamasThe decision by government to require businesses in law to display VAT through “VAT Inclusive Pricing” is turning out at this stage to cause the following significant problems:

#1 – Widespread confusion, because consumers are not certain of what is supposed to happen at Point of Sale (the register) based on the sticker price on the item.

#2 – THE POTENTIAL FOR BEING CHARGED VAT TWICE. Depending on how a business’ Point of Sale system is set up, if the register rings out an item using the price on the VAT Inclusive sticker AS IS without stripping the VAT out, and the system is set up to charge 7.5% on whatever comes up as the subtotal – consumers will end up being charged VAT twice, because the sticker price is supposed to already have the 7.5% included, but the system would be charging VAT on that VAT Inclusive sticker price.

#3 – Limiting consumers’ ability to track and make sense of what is happening with their purchases, because every business place has a different Point of Sale system, which means receipts and the way they show VAT charges and the VAT Inclusive Prices would be different from store to store. This robs consumers of having a set point of reference so they know exactly what their receipt is supposed to show and how VAT is supposed to be split out on their receipt.

#4 – Limiting consumers’ ability to hold businesses accountable for what they are charging. If a Point of Sale system does not split out VAT in a way that shows how VAT is being charged ON EACH INDIVIDUAL ITEM PURCHASED, and only shows a single column of prices with a VAT charge at the bottom, customers cannot know if they are being overcharged on the VAT price or calculation of VAT.

The government has had many meetings with BUSINESSES (though businesses were ignored in numerous instances), but WHAT ABOUT THE CONSUMERS? This decision radically changes the standard shopping and purchasing experience for Bahamians, because when you make a purchase, there should never be confusion about the price on a sticker and the figure that shows up on a receipt or that shows up on a cash register’s display as the item is being cashed out. Using the opposite method of VAT EXCLUSIVE pricing on the other hand, would make it easier for consumers to track price increases as well as reconcile their receipts with sticker prices, hence making the interaction between a business and consumer more transparent; enabling accountability.

GIVEN OUR NON-CONSUMPTION-TAX HISTORY AND FRAMEWORK AS A NATION, IT WOULD HAVE BEEN SENSIBLE AND BETTER FOR CONSUMERS AND BUSINESSES IF STICKER PRICES WERE LEFT AS THEY ARE (VAT EXCLUSIVE), AND VAT IS SIMPLY CHARGED AT THE POINT OF SALE ON THE TOTAL VALUE OF GOODS OR SERVICES PURCHASED.

THE GOVERNMENT MUST IMMEDIATELY ADDRESS THE BAHAMIAN PEOPLE ON WHY IT CHOSE TO LEGISLATE THIS METHOD OF VAT DISPLAY, AND IT MUST ADDRESS THE COMPLICATIONS ITS DECISION IS CAUSING FOR CONSUMERS AND BUSINESSES.