Anticipated welcome relief for consumers from Monday
Kaieteur News
January 27, 2007
“This new list of zero-rated items should see businesses lowering, not raising their prices on most of the basic necessities.” – Finance Minister
Come Monday, consumers will enjoy the benefits of an additional forty zero-rated items.
Last evening, Finance Minister Dr. Ashni Singh signed the instruments that allow for the additional items, goods and services to join the list of others enjoying that status from January 1.
These include basic food items, internet services, building and construction materials, dental hygiene products, domestic air services, river and land crossing charges and agricultural items.
The Minister noted that zero-rated items supplement a list that was previously zero-rated and represent almost all of the basic necessities that previously benefited from zero-rated consumption tax.
This he noted should not result in prices being raised and as a matter of fact, should see a reduction in the prices of most services and goods. “This new list of zero-rated items should see businesses lowering, not raising their prices on most of the basic necessities.”
“Remember that when a service is zero-rated the supplier pays absolutely no VAT on the service they purchase, the provider gets back whatever was expended in delivering service in input credit on all the goods they would have purchased previously; under the c-tax regime they would not have been able to reclaim that tax.”
He explained that where there are cases where businesses may have the newly zero-rated items in stock which they might have VAT paid on at the point of import, they will be able to reclaim it using the import VAT provision.
The forty newly zero-rated items identified by Dr Singh are:
· cooking oil
· goods when imported by a budget agency named in the schedule to the Fiscal Management and Accountability Act 2003
· goods and services under an investment agreement entered into on behalf of the Government with taxable persons — amended to remove imported goods
· plywood
· ink cartridges for computer printers
· margarine and other items qualifying under heading 15:17 of the First Schedule Part I of the Customs Act
· uncooked birds' eggs, excluding hatching eggs
· cooking salt
· dried blackeye peas, but not including canned blackeye peas
· locally produced jams and jellies
· unflavoured cracker biscuits, but not including sweet biscuits
· uncooked fresh, chilled or frozen chicken
· locally produced uncooked fresh, chilled or frozen pork, beef, shrimp, mutton, fish and salted fish, but not including canned products
· matches
· preparations for oral or dental hygiene, including denture fixative pastes and powders yarn used to clean between the teeth (dental floss)
· toilet or medicated soap in bars
· soap powder
· dish washing liquid
· toilet tissue in rolls
· sanitary napkins
· vegetable seeds used for gardening purposes
· ice for fishing purposes
· knotted netting of twine, cordage or rope made up fishing nets and other made up nets, of textile materials
· fungicide, herbicide, weedicide for agriculture purposes
· harrows, cultivators, scarifiers, ploughs, weeders and hoes
· machinery used for preparing animal feeding stuffs
· locally produced garments
· sewing machines
· spools, cops, bobbins and other similar products used therewith
· sacks, bags, of a kind used for the packaging of goods
· the services of transporting passengers and goods by air from one place in Guyana to another place in Guyana subject to the signing of an agreement between the Government and the supplier of the service
· river and land crossing services subject to the signing of an agreement between the Government and the supplier of the service
· veterinary drugs as determined by the Commissioner
· services and spectacles prescribed by an optometrist in the treatment of the human eye and visual system
· funeral services
· human remains
· motor vehicles when imported by any diplomatic mission or consulate or diplomats accredited to Guyana who qualify under the first Schedule Part III B 2 Item 6 made under the Customs Act Cap. 82.01
· goods and services by or for use of persons qualifying under the First Schedule Part III B 2 Item 44 (i) and (ii) made under the Customs Act Cap. 82.01
· the provision of internet services subject to the signing of an agreement between the Government and the supplier of the service
· machinery and equipment for generating electricity from non-traditional sources (for example, solar energy, wind mill, bio-gas)
Meanwhile, three weeks into the system, even as the Guyana Revenue Authority (GRA) continues to monitor the system, the Minister said he is happy to note that a significant part of the initial challenges that were previously encountered have been ironed out.
He expressed optimism that prices will settle and eventually reflect the benefits of VAT to the consumer.
Singh also noted that the positive change is due to the fact that both the consumers and businessmen are now better informed on the process.
“I am pleased with the feedback and the developments so far. Remember that we had never harboured any false illusions, I had always said that the implementation process would not be without challenges.”
Noting the growing involvement in the process, the Minister revealed that some 2,000 businesses are now registered and another 100 have applied for voluntary registration. “We have had resounding success in that regard.”
Acknowledging the need for more work to be done, the Minister said that the intensified education and awareness programmes will continue.