The government should get off its laurels
Peeping Tom
Kaieteur News
January 7, 2007
It is no business of the Guyana Revenue Authority (GRA) if stores and shops choose to simply add to their old prices a flat 16%. It is not the duty of the GRA whether the cost of living increases or decreases after VAT.
This is the responsibility of the government proper and specifically the Ministry of Finance and the Ministry of Tourism, Industry and Commerce. The Guyana Revenue Authority is a tax administration department and should therefore stay clear of the policy and political implications of the implementation of VAT.
Obviously, if there is a loss of public confidence in the Value Added Tax, then it will make the work of the Commissioner of Taxes more difficult. He should however make his concerns known to the government and especially to the Minister of Finance who would then be able to take the necessary steps to address the fallout from VAT.
The Commissioner of Taxes should not be appearing on television bemoaning the fact that in some instances the price of bread has increased. He should not be in public complaining about the fact that some prices have not reduced and about the practice of some businesses simply adding a flat 16% of their costs. He should simply deflect these criticisms to the Ministry of Finance and to the consumer affairs section of the Ministry of Tourism, Industry and Commerce.
The Commissioner of Taxes should be concerned with ensuring that the laws and regulations that his Authority is expected to administer are being followed. He should ensure that every single entity that is registered for VAT received their VAT certificates.
So forget all this nonsense that we are hearing that it is unlawful for people to be raising prices. Since when is that unlawful?
It is not the business of GRA to ensure that consumers benefit from stock relief, since there is no law which states that because a business benefits from stock relief, that business should lower its prices.
While I am sure the existing private sector representative bodies would be urging its membership and the wider business community to ensure that there is consumer relief, there is nothing in the law that compels a business to reduce prices simply because of VAT or the promised credit stock relief.
I also urge the private sector bodies to condemn in the strongest possible language the threat of a "name and shame" campaign. It is unethical for any government department to be issuing such threats.
The Guyana Revenue Authority cannot allow itself to be burdened with the job of managing the cost of living and inflation. This is not the job of any tax agency, but instead it is the responsibility of the government which should now get off its laurels and do what it should have been doing months ago.
The Tax Department had a responsibility to educate the customers about VAT. To an extent this has been done. For too long, however, the tax authorities were concentrating on registration matters and about constantly repeating how many taxes VAT would replace. To the average consumer this really is just cliché.
Some of the methods used in the public relations campaign left much to be desired. I have never been pleased with the way some agencies treat the public's intelligence. I was very disappointed with some of the material used during the public relations campaign.
Guyanese are very intelligent people and do not need to be caricatured by two old ladies, one of whom is totally unaware of VAT and initially thinks it is some receptacle for storing water. If we want to get the message across, let us try less self-deprecating methods and begin to respect our own intelligence.
There should also have been a division of labour between the GRA and the government in which the former would deal with the things that needed to be done for the implementation and administration of VAT and the latter with the policy implications, such as cost of living effects and recommending (only recommending) ways in which the benefits of VAT could be passed on to consumers.
The Ministry of Finance has two ministers. One of those ministers should have been assigned full-time to deal with the cost of living and other policy issues of VAT. So that running concurrently we would have had two effective public relations campaigns. As it was, it was too much to ask the GRA to have single-handedly borne the burden of this process.
This massive PR effort needed to be coordinated so as to avoid the contradictions that we are witnessing.
The GRA for example has been saying that even in those cases where VAT will be charged at a higher rate than the consumption tax previously applied, there should still be a savings to the consumer since businesses would be able to reduce their overheads and administrative costs. However the President of Guyana reduced his New Year's Speech to a teaching lesson about the VAT, repeating what was already long in the public domain and even admitting that some prices would increase.
In the days ahead, the government should put together a top level team to find ways of cushioning the effects on the cost of living of the VAT, since it is now clear that many businesses have found it expedient and convenient to simply add on a flat sixteen per cent to their prices, regardless of what taxes they were paying before.