While the government assures that the increase in Value Added Tax (VAT) would reduce the country’s debt and improve finance, many retailers believe there  will be a greater effect on consumers. 

Director of Retail for Milo B. Butler and Sons, Allan Butler, said transitioning from 7.5 percent to 12 per cent will not affect the company in terms of the changes they  will have to make.

However, the difficulty will be how the establishment is affected in terms of the number of customers coming into their stores, once the implementation of a higher tax rate is put into place.

He said the double taxation of duty and VAT will decrease the customer’s ability to spend and affect those who have businesses here in the country, adding that the VAT increase may also encourage persons to shop abroad. 

Butler said although he knew that VAT would be increased, he did not expect for it to increase with the country’s level of employment as it stands. 

He added that everything sounds good on paper, but there are some things that need to be fixed first before we can implement a higher tax rate. 

Butler suggested that unemployed individuals will not be able to afford to buy goods  and thus have a greater dependency on the government. 

 Meanwhile Rupert Roberts, President  of Supervalue, said the government has to give merchants time to reprice, as it is a process that will not happen overnight.

Roberts added that once merchants get the necessary answers from the government, Supervalue  will begin its transition to 12 percent. 

He added that merchants will be pushing for exclusive pricing, rather than inclusive pricing,  which would allow their businesses to put their own pricing on the shelves, showing the consumer their deals, rather than including the VAT. 

Roberts suggested that the VAT inclusive prices will deter consumers from buying goods unless they absolutely need it. 

“We want to put our pricing on the shelves, show the consumer our  $1.89 corned beef, and if it goes to 12 per cent VAT; add the 12 per cent add the register,” he said.

“When we put 12 per cent on the shelves, the consumer looks at the high price and then they say they’re going to charge me 12 per cent at the register, and unless they absolutely have to have the item, they’re not going to buy it.

“It’s the wrong concept. For the merchants to keep selling and for the government to collect VAT, they should change it back to exclusive pricing.”

As of July 1, 2018, VAT would be increased from 7.5 per cent to 12 per cent, and those items on them updated breadbasket list will not include VAT.