More taxation will be falling on consumers' heads
Consumer Concerns
By Eileen Cox
Stabroek News
April 27, 2003
"Mr Speaker, the Government is mindful of the shortcomings of the Consumption Tax and recognizes the need for the application of a more broad-based tax on the production of goods and services. The Government will, therefore, introduce a Value Added Tax by 2006 and will start the necessary preparations immediately. We are under no illusions about the difficulties and challenges that we will encounter during the implementation of such a tax, given the state of our physical and human infrastructure. Thus we will be seeking technical assistance to ensure a successful launch of the VAT."
With those words the Minister of Finance in his 2003 Budget Speech signalled to consumers that more taxation would be falling on their heads. The news flowing from Barbados is that VAT has siphoned into the Government coffers sizeable sums of money. The money, of course, comes from the pockets of consumers. Was the Government using such sums of money for the benefit of those very same consumers by way of social services and assistance to those with fixed incomes, pensioners, the elderly?
In Guyana, if we look at the treatment of old age pensioners and pensioners under the Dependants Pension Fund, we can come to no other conclusion but that their welfare is not accepted as a government concern. Many feeble and disabled senior citizens travelled long distances to collect their pensions only to find that the post offices had not received the necessary funds to grant pensions. Another day, another journey. It took two weeks to make money available for the payment of old age pensions.
It is to be expected that businessmen are happy about this plan. With the introduction of VAT, Consumption Tax will be removed. Exemptions will be sought; ways and means will be devised to cheat the system. We cannot say that all businessmen are without blemish.
On June 13, 2001, a Value Added Tax Seminar was held at the Ocean View Convention Centre. Mr Christopher Ram presented a paper and made several points which ought to be taken on board by the government before VAT is introduced. I refer to three of them:
*Implementation of VAT in Guyana should not be contemplated unless the current weaknesses of the tax system are adequately addressed.
*The Guyana tax system suffers a culture of tax evasion; lack of data availability; quality and timeliness; a lack of administrative capacity that is reflected in an acute shortage of skilled staff, machinery and equipment and computerization; and a paucity of accounting, auditing enforcement and monitoring systems.
*There is a widely held view that many sectors and entities do not contribute fairly to the tax revenues of the country. Economic inefficiency, inequity and tax evasion are prevalent."
Further, Mr Ram refers to Remissions & Exemptions and says:
"The Annual Reports of the Auditor General have consistently lamented the magnitude and frequency of remissions granted on an annual basis."
Tax holidays, by their nature, are not quantifiable. The Duty and C. Tax remissions for 1997-1999 are as follows:
1997 1998 1999
$6.0B $4.7B $6.3B
The government, to date, has shown no intention of taking on board any of the submissions of the Guyana Consumers Association and the recommendations made by persons who have the welfare of the state at heart. Consumers may therefore expect that VAT will come into force. We may expect advice to be given by foreigners who have little knowledge of the state of our society and who care less about consumers.
At the VAT Seminar Mr John Williams spoke on the experience of Barbados. He said that public reaction to the tax was adverse in the first few months and, secondly, there were government accusations of "price-gouging" by business.
The reception that the Guyanese public will give to the tax will depend on
a. their knowledge of the impact on their standard of living.
b. government's attitude towards poverty and improvement in quality of life.
c. an acceptance that building of schools, roads and bridges will not eliminate poverty.
d. a willingness to consult with consumers and to consider their points of view.
e. willingness to act generally in a manner acceptable to the population as a whole.
