Minister of Finance, the Hon. Michael Halkitis defended the government’s decision to remove VAT (Value Added Tax) on unprepared food items while make his contribution to the 2026/2027 budget debate on Monday.
Halkitis told Parliamentarians, “this reform is a net positive for consumers. The exemption of VAT on food directly reduces prices at checkout putting immediate relief in the hands of Bahamian families. As prices go down, demand goes up, households are able to purchase more or reallocate spending in other ways that improve their overall standard of living.”
The late Rupert Robert, who owned the nation’s largest supermarket chain, warned that the move could cost his company over $1 million per annum and impact staff pay increases.
The finance minister said, “we do not feel that it is a negative for business, in fact, it is a net positive. Higher demand lead to greater sales volumes and in most realistic scenarios higher volume offsets and can exceed increase costs.”
He went further stating, “the government has already taken steps to offset one of the largest cost drivers outside of labour for the retail food industry and that is electricity. All businesses that sell food benefit for this approach and new businesses are able to offset the VAT cost on electricity significantly improving their operating environment.”
The elimination of VAT on unprepared food items came into effect on April 1st.
