VAT and the Vienna Convention
Editorial
Kaieteur News
January 25, 2007
The implementation of the Value Added and Excise Tax was touted as a blessing in disguise for the ordinary man, especially since as the government said, these taxes were not intended to be punitive but revenue neutral as far as the government is concerned.
This may not necessarily be the case because in some cases the new tax is higher than the consumption tax that prevailed. Gasoline and petroleum products attracted a consumption tax of 50 per cent prior to January 1 last. When the acquisition cost moved upwards and the price of the petroleum products almost became prohibitive the government would from time to time adjust the consumption tax downward.
For the past three years the government has had to resort to this measure on no less than five occasions. In one case the government slashed the consumption tax by 10 per cent and a few weeks later it had to slash it further taking it to as low as 35 per cent.
The argument was that even at the lower rate of consumption tax, the government was reaping a windfall. The returns from a higher price, even at a lower consumption tax, would have represented a windfall. The first time the government moved to slash its consumption tax was when the public began to ask whether gasoline would reach the $500 mark.
The cut meant nothing because the price continued its upward move. By the time the government gave up cutting the consumption tax the price of gasoline at the pump had reached $800.
Today the government has announced that the Excise tax on gasoline is now 60 per cent. The only problem is that the announcement was not made publicly. It came by way of notice to the petrol importers, to wit, Sol, Texaco, Guyoil and Esso.
One importer was quick to point out that whenever the government slashed the consumption tax there was often a press release and other publications. However, when the converse occurs there is nary a peep. However, the public is left with the impression that the fuel companies are responsible for any increases.
But there is more to be worried about. The introduction of VAT may actually place Guyana in contravention of the Vienna Convention. The diplomatic community has noted that the Privileges and Immunities Act which governs relations between the host country and the diplomatic community appears to have been abrogated with the implementation of VAT.
The Guyana Revenue Authority and the government are making the diplomatic community pay VAT. The Value Added Tax law 37 (1) states: The Minister may in accordance with regulations made by him in consultation with the Minister of Foreign Affairs authorise the granting of a refund of tax paid or borne or a supply to or import by a person to the extent provided under the Diplomatic Immunities and Privileges Act…
Article 36 of Chapter 18:01 of the Laws of Guyana that deals with the Privileges and Immunities stipulates that the “Receiving state shall, in accordance with such laws and regulations as it may adopt, permit entry of and grant exemption from all customs duties, taxes and related charges other than charges for storage, cartage and similar services (for the diplomatic community)
As things stand, under VAT this category of people must pay whatever is charged then claim a refund. And we know that in Guyana refunds could take an inordinately long time. But the mere idea of having the members of this community pay duties is in contravention of the very laws of this country and of the Vienna Convention.
Surely, someone did not think through the procedures. It is to its credit that the diplomatic community has not raised a fuss. We know that in other countries the laws allow for the diplomat or his spouse to present proof of their status and immediately these taxes and other charges pertain to a tax are waived.
If a law is in contravention of an existing law then it is null and surely VAT as it relates to the diplomatic community is null and void.
Someone must take note of this anomaly and act on it, failing which we could become a pariah in the eyes of the international community.
We know that the government moved to the National Assembly to grant powers to the Finance Minister to make certain amendments to the VAT legislation. Perhaps the removal of the need for the diplomats to pay VAT would be one of those amendments.