The Ministry of Finance and Economic Affairs??? response to an article in the Daily Nation newspaper on June 23, 2015, attributed to a Mr. Andrew Bynoe, regarding the VAT Free Basket of Food Items.

As was disclosed during the 2015 Financial Statement and Budgetary Proposals, a new basket of basic food items that will be exempted from the standard Value Added Tax (VAT) rate of 17.5 % will be available for all consumers from September 1, 2015.

In his contribution, Mr. Bynoe questioned Government???s ???homework??? in reforming the VAT Free Basket of Food Items and also mainly listed the tariff headings for goods from the VAT Act???which served to seemingly give the impression that some foods that will indeed be within the basket, come September 1, had been removed.

However, the Ministry has stated that a great deal of homework was indeed carried out and secondly, the lack of specificity in the article is more likely to have confused consumers rather than effect clarification.

The new basket was carefully selected following discussions and a qualitative and quantitative in-depth analysis of the various tariffs by an Inter-Ministerial Committee of officials from Finance and Economic Affairs, the Barbados Revenue Authority, Commerce, Agriculture, Health and Social Care, over a 9-month period.

Following this process, it was discovered that the basket of basic goods contained over 400 items that could not be legitimately identified as basic, nourishing or affordable for the average Barbadian shopper. The public must keep in mind the fundamental reason for the basket since its inception in 1997.

It was designed as a special VAT exemption on a select basket of basic food items for all taxpayers. The basket was, therefore, always intended to be made available as a way of giving relief, especially to the poor, and to ensure that certain foods, particularly those of known high nutritional value, were always kept within the price range of the average consumer.

Over the years, what became apparent was that entire tariff headings were included in ASYCUDA, irrespective of whether they were applicable or not. As such, what we had occurring, were foods that were never intended to be VAT free, slipping into the basket under the tariff headings, without considerations for the various versions of the foods. This situation clearly had to change.

Simply put, this new basket of goods allows for more specificity where we are simply trimming the fat to make sure that its make-up reflects the needs of the average Barbadian.??For every item that is no longer in the basket, there is a nutritious equivalent substitute that remains in the basket.

This was a strategic recommendation by the Committee as it strongly believed that the changes should not in any way potentially negatively impact the health of Barbadians.??To view the some of the items in the VAT free basket of goods please click here.

Author: Ministry of Finance & Economic Affairs

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