Small change needed to ease consumers’ woes

Authorities should crack down on establishments that raise prices more than the prescribed 5% VAT

Gulf News
17:24 January 7, 2018

A shortage of small change has left consumers perplexed as they end up paying more than the five per cent VAT [value added tax] since January 1.

Traders are not handing back the exact change and have conveniently increased prices by 50 fils to Dh1 to round off the sales price, forcing consumers to pay over and above the five per cent VAT.

Small groceries, big supermarkets and even banks don’t have small change — 5 fils, and 10 fils. Consumers are complaining that shops have increased prices of commodities, as they are unable to give back exact change. Instead of absorbing 5 fils or 10 fils in the existing price, they have increased prices in the name of VAT.

The Central Bank has advised shopkeepers to obtain small change from banks, but banks are also reporting a shortage of small change except the widely available 25 fils and 50 fils coins. The Abu Dhabi Department of Economic Development (ADDED) stepped in to solve the issue by ordering that small change of 10 fils and 5 fils can only be rounded off to 25 fils and traders should not charge customers more than 20 fils in addition to the amount mentioned in the bill. But traders are not complying with this directive and many have already set new prices on their cash registers and are reluctant to change it.

Authorities should crack down on establishments that fleece customers on the premise of VAT, and evolve a mechanism to monitor post-VAT prices. This will ensure that the burden of VAT on consumers remains at five per cent. The Central Bank should also ensure abundant supply of small coins in the market.

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