Kevon Felmine

Pres­i­dent of the Su­per­mar­kets As­so­ci­a­tion of T&T Dr Yunus Ibrahim says a 2.5 per cent re­duc­tion in Val­ue Added Tax (VAT) can mean con­sumers will pay more for food.

In an in­ter­view yes­ter­day, Ibrahim ex­plained t Gov­ern­ment plans to re­view the list of ze­ro-rat­ed items and ap­ply VAT to many of them. VAT was re­moved from 7,000 items un­der the last gov­ern­ment.

Once VAT is ap­plied across the board, Ibrahim said, con­sumers could end up spend­ing more as each cus­tomer's VAT cost would de­pend on the goods in their bas­kets.

He added: "First and fore­most, it de­pends on what they (Gov­ern­ment) put back on the VAT list. Then it is the con­sumers' choice to go in be­tween the oth­er items and buy it or not. They said they are re­duc­ing the ze­ro-rat­ed items and lux­u­ry items af­ter re­view. They are go­ing to in­crease the amount of items that are 'vat­able' but de­crease the rate of VAT.

"That it­self is won­der­ful for elec­tric­i­ty, wa­ter and oth­er util­i­ties be­cause it is across the board but not as it ap­plies to food. Re­mem­ber your kilo­watt rate an hour is not go­ing up so your bill will come down but you are buy­ing the same gro­ceries.

"If you have 100 items in your bas­ket now and 15 are 'vat­able,' imag­ine if they in­crease that fig­ure from 15 to 35. Ob­vi­ous­ly even at 12.5 per cent what comes out of your pock­et is go­ing to be more in VAT and the net fig­ure."

Ibrahim said con­sumers' con­cern was whether the price of gro­cery items de­pend­ed on whether the VAT re­duc­tion was passed on­to them by the var­i­ous sup­pli­ers.

Al­though the cost of some prod­ucts were ini­tial­ly re­duced when the for­mer Peo­ple's Part­ner­ship gov­ern­ment re­moved VAT from 7,000 items, he said in­fla­tion caused the prices to in­crease.

He added that T&T had a free mar­ket in terms of prices, say­ing the same items in a su­per­mar­ket can cost more in oth­er places.

"What we can say is that if it is passed on to us by sup­pli­ers in this fierce com­pet­i­tive su­per­mar­ket en­vi­ron­ment that ex­ists in Trinidad and To­ba­go, trust me it is go­ing to be passed on to the con­sumer.

"The sup­pli­ers on the oth­er hands are the ones who are at that mer­cy, not the su­per­mar­kets. We are a free mar­ket here. You will buy a juice that would be $2 more in a phar­ma­cy, it is up to your where you buy it," Ibrahim said.

Dur­ing Mon­day's 2016 Bud­get pre­sen­ta­tion, Fi­nance Min­is­ter Colm Im­bert pro­posed to de­crease VAT from 15 per cent to 12.5 per cent.

This would be done in tan­dem with re­view­ing and ad­just­ing VAT ex­emp­tions and ze­ro-rat­ed items which, he sai., were as­so­ci­at­ed with non-es­sen­tial items and were not crit­i­cal­ly im­por­tant to cit­i­zens' liveli­hoods and ba­sic cost of liv­ing. To­geth­er, he said, that was ex­pect­ed to yield $4 bil­lion in tax rev­enue.