VAT is good -- President maintains
By Mark Ramotar
Guyana Chronicle
November 29, 2006
PRESIDENT Bharrat Jagdeo yesterday maintained that the Value Added Tax (VAT) billed to come into effect from January 1 next year will benefit Guyana and hit out at the fear some are trying to stir about the tax.
“I know that there has been a lot of misinformation about VAT but…the Cabinet has met extensively on these matters for the past month or so…and there is no doubt that VAT is good for Guyana,” President Jagdeo told reporters at the Cheddi Jagan International Airport, Timehri a few minutes before he left for Brazil en route to Nigeria.
The President said what he finds very reprehensible is that Guyanese are not given the true picture about VAT, what this tax is all about and its benefits to the consumers.
“There is this big fear in society that VAT will increase the cost of everything (but) there will be no VAT on any education material, no VAT on prescription drugs, no VAT on cooking gas, kerosene, diesel, gasoline…and no VAT on a whole range of basic food stuff,” he declared.
“So some items will go up but a lot of items will come down too (and) I hope that a true picture is painted of the VAT,” the President posited.
In this regard, he asked Finance Minister, Dr. Ashni Singh – who he met at the airport along with Commissioner General of the Guyana Revenue Authority (GRA) Mr. Kurshid Sattaur - to host a news conference later in the afternoon to present a comprehensive look at VAT.
At the hastily-called news conference at the NCN television studios around 16:00 h, Singh echoed the earlier sentiments of President Jagdeo that VAT is good for Guyana.
“The government will continue to monitor the implications that the Value Added Tax will have on consumers, on businesses and on the cost of living in order to ensure that the implementation of VAT is achieved successfully and is achieved in a manner that lends itself to the achievement of government’s policy objectives,” he told reporters.
In line with this commitment, Singh said Cabinet, the Ministry of Finance and the GRA have been monitoring very closely feedback from various stakeholders on the impending implementation of VAT.
“We have been engaging in very active consultations with various industry groups and other groups, receiving responses and reactions from them, hearing their concerns and providing where appropriate, explanations and clarifications,” Singh said.
“Sometimes I fear that the reason for implementing VAT and the conviction that VAT is good for Guyana…is somehow being subordinated to specific concerns and these specific concerns are then given a level of prominence that attempt to drown out the core message that VAT is good for Guyana and that VAT is supported by all interested stakeholders in Guyana,” the Finance Minister charged.
“If we are all convinced that VAT is good for Guyana, then we should all work to ensure that VAT works for Guyana.”
He also stressed that Guyana is in no way “reinventing the wheel” when it comes to implementing VAT.
In this regard, he noted that Guyana is not the only country to introduce VAT, which was first introduced in France in 1947 and is today in more than 120 countries, including six Caribbean Community (CARICOM) countries -- Barbados, Jamaica, Trinidad and Tobago, Haiti, Dominica and Belize.
Singh, in a lengthy presentation on the intricacies surrounding VAT and its implementation, noted that the government decided to reform the taxation system, replacing old inefficient taxes with a modern VAT and a separate excise tax regime on four selected goods (petroleum products, tobacco and tobacco products, alcoholic beverages and motor vehicles).
The reasons he cited for this major reform initiative include the fact that it broadens the tax base, makes tax evasion more difficult and creates an incentive to comply with the tax laws; it reduces inefficiencies, distortion and cascading in the tax system; it makes the country more attractive for investment purposes and exports more competitive; it prepares the country for compliance with Guyana’s commitments under various international trade agreements and for anticipated shifts in the productive structure of the economy; it has been advocated as being appropriate by international authorities and domestic stakeholders; and the government regards the introduction of VAT as part of an ongoing tax reform process.