After the government announced that VAT will be removed from certain grocery items starting April 1, many Bahamians are discussing the tax again.
Who introduced VAT anyway?
Value Added Tax, known as VAT, was introduced in the Bahamas in 2015 under the Christie-led administration. At the time, VAT was presented as a way to stabilize government revenue and modernize the tax system.
When it first came into effect, VAT was set at 7.5 percent from the originally proposed 15 percent.
But VAT did not stay there.
When the Free National Movement assumed office in 2017, it was increased to 12 percent, a move that sparked widespread frustration. Many Bahamians felt the increase came too quickly and hit households hard, especially those already struggling with the cost of living. But bread basket items remained VAT-free.
Eventually, the VAT was reduced again, this time to 10 percent, when Philip Davis won office in 2021. But it was cut again in 2025 to 5 percent on fruits, vegetables, baby food and frozen foods.
So when you see VAT on your grocery receipt now, you are paying a tax that has been part of Bahamian daily life for nearly a decade, shaped by decisions made across multiple administrations.
VAT is not fixed but it can be raised or lowered.
And now, it can be removed from certain items.
Starting April 1, VAT will no longer apply to fruits, vegetables, baby food, and some frozen foods. According to the government, it is to ease the cost of living, ahead of a general election.
It remains to be seen if the relief is felt or is just a policy announcement.