Retail prices and the new levy
It was reassuring today to hear the president of the Barbados Chamber of Commerce and Industry, Eddie Abed, putting the position of the business sector in relation to price increases which will result from the new National Social Responsibility Levy which takes effect from this Thursday, September 1. The two per cent imposition applies to most imports.
Amid public concern about the scale of price hikes and also that some entities may engage in price gouging, Mr Abed told local radio station, Voice of Barbados, that price increases will only take effect after existing inventory has been sold out and new stock, imported after September 1, start making its way on to the shelves of retail establishments.
As the Chamber president sees it, the first set of price increases should be noticeable around the middle of next month beginning with supermarkets as they operated on a ten-day cycle where the movement of stock is concerned. He also revealed that some businesses were looking at ways to absorb the levy to avoid passing on the full additional cost to consumers.
Yesterday, Minister of Finance, Chris Sinckler, told reporters the levy which will raise $60 million annually to help offset the rising costs of public healthcare until a National Health Insurance Scheme is up and running, should not result in any immediate or excessive price increases to the consumer. He urged Barbadians to boycott those companies where price increases were seen as exorbitant.
Perhaps as a result of remembering when prices shot up almost overnight following the introduction of the Value Added Tax (VAT) in the late 1990s, prompting accusations of price gouging against some retailers, Barbadians were fearing that they would be in for a repeat of the experience from Thursday.
Indeed, one retail establishment, to which Mr Sinckler alluded in his comments to reporters, might have contributed to conveying the impression of immediate price increases by suggesting that consumers should come in and shop now as prices will not be the same after September 1.
As Mr Abed explained, Mr Sinckler had also said that the two per cent levy, announced during the 2016 Budget presentation earlier this month, should only be reflected in the price consumers pay after existing supplies in warehouses have been exhausted and new stock brought in after September 1 started appearing on store shelves.
Minister of Industry Donvillle Inniss, who has responsibility for consumer affairs, had threatened to name and shame businesses which were found to be engaging in price gouging.
What was disappointing, however, was Mr Sinckler’s acknowledgement that the Ministry of Commerce had little to no power to penalize price gougers, but that its responsibility only was to monitor prices and alert Barbadians. Clearly, this deficiency needs to be addressed at a legislative level to ensure effective protection of the consumer. This matter should be a priority for Mr Inniss.
Mr Abed’s disclosure that some businesses would try to absorb the two per cent as much as possible to avoid having to pass on the full impact to the consumer is a gesture which Barbadians will welcome. However, it is quite evident, from the reaction of the public on this latest issue, that Barbadian consumers view the retail sector with suspicion.
Indeed, it has been so for some time and is a matter which businesses should address as part of their corporate social responsibility (CSR) in the interest of improving the vital relationship with customers whose patronage is essential for their success.
What would go a long way towards removing the suspicion is if retailers, acting through the Chamber of Commerce, could share information with the public showing how prices they will be asked to pay, are computed following the application of the levy. In the absence of such information, consumers are left to guess.
Conclusions based on guessing, rather than hard facts, are often erroneous but can still form the basis of negative perceptions which can be damaging to relationships. It is in the business community’s interest to clarify any misunderstandings on this issue by engaging the general public.
We too are anxious to see what the price increases will be.