Private sector 'furious and hurt' at treatment over VAT chaos
- GRA offers no sympathy
By Nicosia Smith
Stabroek News
January 9, 2007
Outgoing President of the Georgetown Chamber of Commerce and Industry (GCCI) Gerry Gouveia says the private sector is "furious and hurt" over the treatment meted out to it by the Guyana Revenue Authority in the wake of the chaos surrounding the implementation of the Value Added Tax (VAT).
Responding to statements by the GRA that the practices of some businesses have bordered on price gouging, Gouveia said the GRA seemed to want the business community to get "amnesia" and forget the consumption tax (c-tax) already paid on goods in stock before December.
Yesterday morning, the GCCI president held a press briefing at the chamber's Waterloo Street headquarters before visiting several businesses to observe the VAT implementation process.
He emphasized that stock relief was only eligible on stock imported or manufactured in December, not in the preceding months. "…You must forget that you pay (c-tax)?" he asked rhetorically, "it can't happen."
The GRA has asked businesses to adjust their prices to take stock relief into consideration and to reflect the 16% now being paid.
Gouveia asked who will bear the cost for the c-tax paid on goods imported in September, October and November. He also claimed that consumers have been assaulting the staff at businesses; because they believe the 16% VAT is being pocketed by the businesses.
He said he did not want the GRA to treat the business community as "enemies of the state".
"We are furious and we are hurt," Gouveia said.
The chamber president acknowledged that the new tax system was good for Guyana, but said the GRA needed to be considerate and help the business community. Gouveia called for the burden in this transitional stage to be shared by the government, businesses and the consumer, adding, "we are very concerned with what is happening to the consumer."
He recommended that the government drop VAT rate by half to 8% for a period of three to four months and the business community reciprocate by cutting back "a little" on its mark-up.
However, at a press conference called hurriedly yesterday afternoon, GRA Commissioner General Khurshid Sattaur offered no sympathy to businesses which claim that they have a large amount of stock-in-hand.
"The GRA will implement VAT effectively regardless of the efforts of these irresponsible members of the business community," Sattaur said. "I maintain that some businesses are not upholding their corporate responsibility by allowing market forces to dictate prices."
In a press release issued earlier yesterday, the GRA said: "We have noted the sudden claim by businesses of huge stocks which incidentally is not supported by the importing and other statistics of the GRA.
"We therefore strongly recommend to these instigators that they educate themselves of these unscrupulous pricing practices employed by these businesses before they attempt to attack the GRA.
"It is a lame excuse for businesses [to say] that they were uneducated about VAT. VAT was touted in the National Budgets some three years ago. Therefore, the GRA will administer and police the system in full respect of the law."
VAT had been slated for implementation in July 2006, but was postponed after intense lobbying by the private sector.
Addressing the issue of defaulters, Sattaur said they will face the full force of the law, since it is the view of the GRA that businesses had adequate time to prepare for this change.
Consumers are being encouraged by the GRA during this transitional phase to exercise their right in demanding what they deem to be fair.
"I want to advise businesses that we will continue to work with them and persons who require training sessions are encouraged to make contact with the VAT Department to make necessary arrangements," said the commissioner.
Meanwhile, during his walkabout, Gouveia explained to market vendors and the man-in-the-street the position of businesses that are charging VAT without giving price reductions.
At New Era Business Enterprise, at 162 Lamaha Street, owner Karen Bacchus said she has encountered no problems as her customers are prepared to pay VAT. The store prices were not VAT inclusive. New Era added VAT to its old prices, but consumers are given discounts on certain items. Bacchus said she has stock-in-hand as far back as 2002, because the items sold in her shop were not "demand products". Bacchus said her stock was not zero-rated since the zero-rating offered on educational materials was limited.
At National Hardware (Guyana) Ltd, Manager Fizul Sattaur said the store had reduced its mark-up by way of discounts to the consumer. Discounts ranged from 5% to 15% and in some instances items are offered at the wholesale price. But though some customers were satisfied by National Hardware's efforts, others were not and these shoppers complained to the media and the GCCI president. The VAT registration certificate of this business was displayed and signs notified the consumer that the prices were not inclusive of VAT.
Amo Persaud, a store manager on Water Street told the media that once the old stock at his store was sold out, consumers will begin seeing lower prices. Persaud said consumers are not aware that businesses are collecting the tax for the government.
At Guyana Stores on Water Street Store Manager Hardial Singh said consumers were receiving discounts, but VAT was being applied to the old price.
On Water Street, a consumer complained about the increased cost of a padlock compared to last year. Another consumer was distraught that the prices of bras and panties had increased.
The woman said she had bought a quantity of underwear from Rani's Fashion at 111-112 Regent Street and the business had increased the prices of these items and then applied VAT. She left the bill with the GCCI president.
Over at Muneshwer's Ltd, Shipping Manager Robin Muneshwer reiterated that the business is VAT compliant, supports the implementation of the tax and does not plan to defraud the government. Muneshwer's will make a court appearance today, after the GRA laid VAT invoicing violation charges against the company. N P Department Store also has a court date today for VAT invoicing violations. Other businesses are also expected to be brought before the court.
Gouveia said the chamber was "very sad that the GRA took this highhanded attitude" in its treatment with Muneshwer's.
Robin Muneshwer said most of the company's stock came into the country in September and October from Asia and c-tax was already paid on these items. He said the store only had one or two things imported in December from Trinidad and Tobago.
Muneshwer's has begun to lower its prices and will absorb whatever loss it incurs. A number of items like zinc sheets, plastic bottles, bolts and knots and nails that carry the 10% c-tax will now carry 16% VAT, according to information from the company. This business also had its VAT registration certificates displayed and notices indicating to consumers that the prices were not VAT inclusive.
At Fogarty's Supermarket Vibert Parvatan told the media that VAT is a learning process. He said businesses have to work together.
Stabroek News observed at Fogarty's that one consumer purchased several items including zero-rated items and was given one bill. Parvatan explained that at the end of each taxable item a little 'T' is marked, which distinguishes the taxable item. He said the GRA was approached and Fogarty's was given permission to do this.
And Sattaur concurred at the press conference yesterday that businesses were given this option once they can distinguish, which item is zero-rated, exempt or standard rated.
The GRA will soon be sending out tax return forms, a guide to filling the form along with a VAT book, stating the records to be kept under VAT to all registrants. The relevant form will also be sent to those businesses that will be claiming transitional relief for stock on hand at December 31, 2006.
Sattaur said that the tax returns will show how adequately businesses have kept their records.