Reduce VAT or face the law, Traders told!

05/01/2016 11:15

The Consumer Council of Fiji is issuing a stern warning to all traders and service providers who have failed to adjust the price of the goods/services to reflect the new VAT rate of 9 per cent which came into effect last Friday, 1 January 2016.

 The traders/service providers must get their act together and make timely adjustment to the prices otherwise they should be ready to face the full brunt of the law. Government has introduced a penalty of $50,000 upon conviction to a fine of up to $100,000 or 5 years’ imprisonment for those who do not comply with the new VAT rate. So, the choice is theirs – do they want to pocket extra dollar or two or pay a hefty fine of $50,000?

 A snap check by the Council in the Capital City, Lautoka and Labasa has found that some defiant traders/service providers are dillydallying in reducing the prices of the goods and services; what we have seen is that some traders seem to be least bothered about making the change and are acting ignorant when questioned by the consumers.

 Some consumers have also come forward with evidence (receipts) to prove that not all traders have made adjustments to the prices of the goods and services in line with the new VAT rate. We received a number of concerns/queries from shoppers over the weekend about the price change.

 The Council will not be taking this lying down but will be forwarding all the evidences to Fiji Revenue & Customs Authority (FRCA) to undertake an investigation and impose spot fines on these unscrupulous traders who have failed to pass on the 6 per cent VAT reduction to the consumers.

What our findings display is a brutal disregard of business ethics by some traders who are turning a blind eye to the Government’s initiative to assist consumers cope with rising cost of living by reducing VAT and duty on goods and services.

The trend so far has been:

  • Some traders have cunningly adjusted the price of only a handful of items in their stores while charging old price on other items that is not a regular item in household baskets. For example items such as honey, almond, sultana, semolina, and sago. These are just some items which have caught our eyes but we are certain that there are many more products which are still being sold at the old price. A consumer highlighted that the price of Tiffiny Yoghurt sold for $5.95 last year was sold for same price of $5.95 in 2016 without any adjustment.  Items such as lemonade, soft drinks and other household items still carry the old prices.
  • What is more deplorable is to see that some business have reduced the price of the items with just few cents, which means the full 6% reduction is not passed on to the consumers. This is a mere gimmick used by such dishonest traders/service providers to mislead the consumers. For example a consumer purchased 1 carton of Fiji Premium beer on 2 January 2016 and found that the price was not fully adjusted. The price last November was $60. However, to his dismay, the price was reduced to $58 whereas with a new price should have been $56.87 after VAT reduction.
  • In some cases, the traders have displayed one set of price on the product but when cashing the item, the cash register reads another price with consumers paying more. 
  • There was one instance where a drapery store was found using the VAT reduction as a marketing tool to attract customers with an advertisement, “6 % off on all items” – this is misleading as the 6 per cent drop is not because the trader has decided to reduce the price but it is mandatory to reduce the price by 6% as a result of VAT reduction.  Consumers may demand 6 % off on already adjusted VAT price.

We will not spare any trader or service provider because we now have evidence against some of them who have failed to pass on the VAT reduction, derailing the State-initiative.  The Council is optimistic that FRCA will persecute the perpetrators and fine them.

In the meantime, the Consumer Watchdog is thankful to those consumers who have come forward to lodge their complaints.  In the absence of consumer helpline, consumers can lodge their VAT-related complaint in person or via email or through letter with evidences.