Written invitations were sent to the Guyana Revenue Authority (GRA) and the Finance Ministry but neither agency sent a representative. This is the second time in less than a week that these two critical entities have been no-shows at VAT seminars. Last Wednesday Ram launched his VAT and Excise Tax handbook. Both agencies were invited but no representative was present to answer questions posed by the audience.

At the PNCR-1G seminar at the Tower Hotel those who attended also had several questions for the tax authorities and those questions were posed to the presenters who tried to provide answers. Among the comments made was the perception that if members of the business community divided their businesses and re-incorporated them using the names of persons residing overseas they could "beat the VAT". This was a reference to the $10M threshold for VAT registration. Other participants wanted to know if VAT would reduce poverty and raised concerns about price gouging. There was also a call for a peaceful protest to bring concerns about VAT to the government's notice.

Parliamentarian Winston Murray who spoke at the seminar said that the Finance Minister would have to seek parliamentary approval before the zero-rated list could be extended to include food items or meat like chicken. Murray said no Bill to amend the VAT Act had been tabled in Parliament to date. For this draft to succeed the government would have to adopt it and present it in Parliament since it has revenue implications.

Ram's draft Bill seeks to make 18 amendments to the VAT Act 2005 in several sections and under four schedules. These amendments include increasing the number of zero-rated items to include essential food items, medicine and books; to exempt services provided by an agency of the state and public transportation services from VAT; re-introduce the Travel Voucher Tax Act and provisions relating to the Premium Tax in the Income Tax Act; to make provisions for the treatment of bad debts; second-hand goods excluding livestock; and stocks held at the date the Act comes into force.

Ram, at his handbook launching last week had asked "by what logic did we arrive at the decision to remove the Travel Voucher Tax and yet claim that we cannot afford to zero-rate textbooks?" In relation to the Premium Tax, Ram had noted that the consequence of the repeal of this provision is to transfer the cost of the tax from a foreign insurance company to the Guyanese payer.

Murray called for the list of zero-rated items to include agricultural inputs, funeral related expenses, internet services and education supplies among others. He advocated that if VAT is lowered from 16% to 15% it would be a basis for rational discussions.

An impact assessment has shown that the government currently collects $16.4B from the eight taxes that will be repealed including the Consumption Tax( 5%-128%); Travel Voucher Tax (15%); Service Tax (10%); Premium Tax (6%-10%); Hotel Accommodation Tax (10%): Entertainment Tax (5%-25%); Purchase Tax 30% and above and Telephone Tax (10%). All of these areas will now be charged at a VAT rate of 16%.

Murray contended that the government has noted that it expects to gain $16.9B under VAT on the official GDP estimates. The estimates from the official GDP, he said, are underestimated by 40% and the government is expected to gain $20.1B from VAT through the real GDP, making VAT at 16% revenue positive at the macro level.

The VAT rate of 16% is burdensome, he said, adding that 15% was less harmful (at a 15% VAT rate using real GDP the income after these taxes are repealed should be $18B).

The public education campaign was also lacking, Murray said, noting that the characters in the advertisements seemed to be proponents of VAT instead of educators on the tax. He called for a comprehensive VAT programme to be launched that is not a "hard sell." The parliamentarian also wanted to know where consumers could go if they have concerns about price gouging, he believes that a mechanism should be in place for this.

GRA Commissioner Khurshid Sattaur had noted that consumers will have to police VAT since there will be no price controls.

The PNCR-1G has advocated a phased implementation of VAT, so that the GRA could work out any kinks, since implementing VAT on 100% of the goods "could be inviting chaos." It has also said that the January 1, 2007 implementation date should be revisited. Over the past week the GRA has advertised several vacancies including a Deputy Commissioner for the Information Technology Division, technicians, supervisors, web developers and database administrators.

Murray argued that if the tax is revenue neutral then nothing will be lost if it is deferred. The government has maintained that the tax will not be deferred.

Ram said he was disappointed at the way VAT was handled by all stakeholders including the political parties, unions, civil society, the private sector and the government. The dollar is deteriorating, Ram said, and inflation was creeping up. Noting that VAT will increase the cost of living, he said a basket of goods for shoppers both at Nigel's Supermarket and Bourda market would increase by 10%. Ram said he was speaking based on information derived from a survey of both baskets.

The issue of stock on hand come January is a major concern and one which the private sector should be more vocal about, Ram said, since come January there will only be income and no input taxes for the old stock. Businesses will have no tax invoices to submit for a refund.

And if the GRA should fall short in its implementation of VAT it will cost the agency and the country billions in lost revenue, said Ram. "We have a right … a duty to speak out on these issues."

Relevant VAT forms such as the refund forms are still to be made public and businesses still do not know what information must be in the sales invoices that will be issued for goods valued at $10,000 and under.