Sattaur denounces PSC VAT claims
Guyana Chronicle
January 15, 2007
AS THE debate and exchange of views on the Value Added Tax (VAT) continues, Commissioner General of the Guyana Revenue Authority (GRA), Khurshid Sattaur has rejected a statement by the Private Sector Commission (PSC), denouncing it as “grossly misleading in many respects.”
The PSC has expressed serious concerns at the increase in prices for consumers for many basic food items which it claimed the implementation of VAT is causing.
“It is important that the consumer should note that a very wide range of basic foodstuff which did not previously attract Consumption Tax, such as beef, fish, chicken, pork, butter, margarine and a range of everyday consumer items, now attract the 16% VAT, thus contributing to the increase in the cost of living,” the PSC charged.
However, Mr. Sattaur said if this so, would the PSC explain how a loaf of bread is being sold at $220 at some places, even though it is among the zero rated items, and while a leading manufacturer is selling it for $152, which was the same price before the implementation of VAT.
“This is just one example where the price of basic commodities, including food items, have increased at unacceptable disproportionate levels or ought not to be increased in the first instance because they continue to be zero rated,” Sattaur asserted.
In a statement over the weekend, he said the same bread was retailing at $180 per loaf prior to the implementation of VAT.
The PSC argued that the majority of everyday consumer items which are imported and locally produced and which were previously taxed at less than 16% and are now being charged for VAT will increase in cost.
The private sector umbrella body also reiterated that it has suggested to the government several proposals for consideration which could bring relief to the lower income consumer.
The PSC also said: “It is important for the consumer to understand that under the VAT system businesses are responsible for the application and collection of VAT for the government and are not responsible for the increase in prices which result. Businesses have to remit all the taxes collected to the government which is the sole beneficiary.”
However, the Commissioner General slammed this contention as “mischievous” as it creates the impression that all businesses are collecting and remitting VAT, adding that this is an unfortunate observation by the PSC.
He explained that when businesses collect VAT they are allowed in the first instance to use such sums collected to set off against what has been paid by them as VAT for their own purchase of taxable supplies, either at the point of imports or when they make purchases of taxable supplies.
He said, as such, only the net collection is required to be remitted on a monthly basis, emphasising that in this regard businesses which have registered to administer VAT, benefit from having their own payments refunded to them through funds that have been collected in the administration of the VAT arising from their sales.
The Commissioner General said that, in the second instance, businesses are permitted the use of such funds collected net of refunds they are entitled to as part of their current working capital because the remittance of the sums owing to the government is not required to be paid over until the 15th working day of the new month.
He said, as an example, where on imports a business incurs $16 VAT paid on the duty paid value of a single commodity and is sold and realises VAT of $20, inclusive of selling price, the business is allowed to set off the $16 paid on imports from the collection of the $20, and is therefore required to remit only four dollars.
The business is also entitled to utilise the four dollars excess VAT to be remitted in the business operations until the 15th working day of the next month, he said.
The PSC expressed dismay too at what it described as “highly irresponsible and dangerously provocative statements which have been made by the Commissioner General of the GRA” obviously intended to lead the public to believe that it is the business community that is responsible for the increase in the price of goods and services following the imposition of VAT.
The PSC said it pointed out to the government that these statements have resulted in consumers threatening violence at businesses which are obliged by law to apply VAT for goods and services, and as such is urging the government to publicly correct the false impression being given to the public.
“We would greatly urge the PSC to take time to study not only the system of taxation pertaining to the VAT but also, rather than seek to blame the government and consequently the VAT for the kinks that are currently occurring since VAT implementation occurred, enquire into the unscrupulous practices of some,” Sattaur exhorted.