Trade unions are beginning to call for answers to critical questions on Value Added Tax (VAT) before its implementation come January and on the top of their list is the zero-rating of non-prescription drugs and basic food items.

Over the past weeks the calls have intensified for the government to zero-rate or exempt basic food items and to release this list as soon as possible. Although the government has said that such a list would be produced it has not said when it would be made available.

President of the Federation of Independent Trade Unions of Guyana (FITUG) Grantley Culbard said yesterday that government should provide this list before VAT is implemented.

The grouping which includes the main sugar union GAWU, the CCWU and NAACIE, is also calling for the zero-rated list of items (that includes water provided by Guyana Water Inc, power supplied by Guyana Power and Light and travel by air) widened to include basic food items and non-prescription drugs or over the counter medications. Currently prescription drugs and medical services are tax exempt.

Culbard said the union is concerned about the country's preparedness to implement VAT since many businesses are not registered. Last week the Guyana Revenue Authority Commissioner General Kurshid Sattaur said that less than 10% of the 2,500 businesses being targeted for registration had registered. Sattaur said his staff were stepping up their work and would be prepared to implement VAT.

FITUG is also concerned about the ability of businesses to administer VAT since many, apart from registration, do not have the necessary systems in place.

"Who is to know which is the new stock and old stock?" Culbard questioned, speaking in relation to stock-on-hand come January, noting that consumers are likely to be taxed twice when the old stock is sold, and adding "we don't want the poor people to be hurt." The GRA is yet to pronounce on this critical issue.

Culbard also said that the full page advertisements by the GRA showing savings on a pair of jeans would not alleviate the man-in-the-street's concerns that the cost of living would not rise. He said that while FITUG accepted that the government thought VAT would be able to bring in revenues from tax evaders, "the question is, are we fully prepared to do this thing properly?"

Officials from the Guyana Trades Union Congress were not available for comment.

As reported by Stabroek News on Monday, the Guyana Public Service Union (GPSU) also discussed VAT and its implications.

The GPSU said it hoped government would zero-rate basic food items, educational materials and medical supplies. On Saturday, GPSU Education Officer Vera Naughton remarked: "We are already pressed to cope with high prices of commodities and so we're hoping that for the regular public service worker, these items are not taxed." Currently educational services by registered institutions are exempt.

The GPSU was also concerned about the wage increases planned by the government in the light of the implementation of VAT come January.

"We can't accept 5% [when] the inflation rate according to the Bank of Guyana and the Bureau of Statistics [would be] 8.3% with Value Added Tax [and] cost of living is likely to rise by an additional 10%," she said.

Private Sector Chairman Michael Correia had called on President Bharrat Jagdeo last month in his address at GuyExpo 2006 to move quickly to cut personal Income Tax and Corporation Tax in light of the implementation of the VAT, to ease the cost of living. (Nicosia Smith)