By Gerrino J. Saunders
Journal Staff Writer

With food items becoming more and more expensive the Davis Administration has
taken another major step in their effort to make food more affordable for Bahamian
families.
While making the mid-year budget communication this week Prime Minister
Philip Davis announced plans to reduce value added tax (VAT) on a certain
category of food items.
He said, “I will be tabling an amendment to the VAT Act with effect from April 1,
2025 to reduce the VAT rate on unprepared food from the current rate of 10
percent to a new rate of just 5 percent. This amendment to the VAT rate will only
apply to entities whose primary business is the sale of unprepared food. This would
include grocery, convenience stores and gas stations. However, this will not
include restaurants.
“To be clear this also applies to the importation of unprepared food. The amended
VAT Act will include the list of food items that will attract the 5 percent VAT
rate.”  
Mr. Davis said for clarity the amended Act will include the list of food items that
will attract the 5% vat rate.
He said April 1 st was chosen to allow food merchants time to adjust their prices and
systems to ensure a smooth transition for businesses and consumer.
The Prime Minister also wanted to make it clear that the reduction will not have a
negative impact on the revenue generation.
Explaining why he said, “we have worked hard to shift more of the tax burden to
those who can best afford it. As I outlined, the introduction of the corporate

income tax for multinationals who operate in The Bahamas (and who have more
than $750 million in annual revenue) was one important step in that direction.
“In addition, instead of imposing major new taxes on Bahamians, we are working
hard to collect more of the VAT already owed by larger companies, and we are
improving real property tax compliance,” he said.
The Official Opposition say while they welcome the reduction in VAT on
unprepared food items they feel it does not do enough to truly aid thousands of
citizens struggling to put food on the table.
The opposition also suggested the mid-year budget statement was lackluster and
does not give the Bahamian people hope for a brighter future in the short to
medium term.
Free National Movement Leader Michael Pintard suggested the mid-year
performance communication was filled with promises and dreams disguising the
governments’ short comings.
He said, “This government failed to provide relief for the cost of living, failed to
provide a pathway for sustainable economic growth and development and failure to
show how they have governed in a fiscally responsible manner, and how they have
been transparent with what they do with your (Bahamian people) money.
Prime Minister Davis announced record numbers for revenue collection in several
areas including real property tax, VAT, departure tax, and business licenses.
However, Mr. Pintard said despite this the government still finds itself at a fiscal
deficit and no obvious plan on how it will turn things around.
Mr. Pintard said the government increase in first half recurrent expenditure of
$192.3 million is seemingly out of control, suggesting the government is using the
money to award “no bid” contracts to its members and supporters over the past 12
months.
Based on the mid-year performance the official opposition predicts the economy
will continue to struggle and things may get worse before they get better as it
relates to the cost of living.
The FNM MP for East Grand Bahama Kwasi Thompson said while the
government did not cause the crisis they are not doing enough to mitigate the cost
of living crisis.

On the other hand Prime Minister Davis said there is no need for alarm as “The
fiscal landscape of the nation is showing promising signs of sustainability, paving
the way for further investments in public services and infrastructure.”
He said, “Our country’s economic recovery after the pandemic has been robust,
and it is a result of replacing bad policies with good ones. That our recovery has
been the strongest in the region confirms that there was nothing inevitable about
our success – it is a testament to the work we’ve done in partnership with the
Bahamian people.”
With that said the Prime Minister said, “We have a long way to go, because despite
the strength of our growing economy, and jobs numbers that are the best they’ve
been since 2008, it’s still a tough time for a lot of Bahamians.”
Continuing he said, “That’s why we’re working so hard on our energy reforms,
because high electricity bills have been a huge burden, and why we are bringing an
increased focus to housing, and why we’re trying to help with smaller things, too,
like school breakfast, because it all adds up.
“We hope that reducing VAT on food items will help Bahamians check out more
of the groceries they need to feed their families,” said Mr. Davis.