VAT fallout
Stabroek News
January 12, 2007
Earlier this week the Guyana Revenue Authority and sections of the local private sector- specifically the Georgetown Chamber of Commerce- clashed head-on over the implementation of the new Value Added Tax (VAT) with both sides trading accusations about the veracity of each other's actions. The GRA also lashed out at sections of the electronic media accusing them of providing misleading information on VAT.
The spat between the GRA and the private sector marked a swift and dramatic turn of events and, significantly, the harshest critic of the manner in which VAT was implemented was Georgetown Chamber President Gerry Gouveia who, more than any other private sector official, had spent the weeks and months preceding its implementation "talking up" the new tax. As far as the media are concerned the GRA had spent millions of dollars in advertising using most if not all of the country's media houses in its public education campaign.
What made the fracas all the more unfortunate was the fact that whatever the merits or otherwise of the charges made by the GRA one would have thought that now that VAT is in force and cannot be wished away the sensible thing would have been to attempt to iron out, together, the various problems that have arisen in the implementation of the new tax measures, many of which were anticipated anyway.
It is clear, for example, that many of the implementation glitches of the past few weeks have arisen as a result of the failure of some businesses to comprehend the complexities of VAT which led to errors at the implementation stage. As far as the media are concerned it is also entirely true that the level of media expertise on VAT is limited and that accurate reporting would have depended on the combined efforts of the VAT Implementation Unit and the various media houses.
What the past two weeks have demonstrated also is that sections of the business community and the consuming public have real and legitimate concerns about the way in which VAT will affect them. It serves the interests of no one for the GRA to pretend that this is not the case or to hope that threats and tantrums will see the problems off.
One example of the real and legitimate concerns of businessmen is the issue of "credits" for old stock on which consumption tax has already been paid. The credit applies only to stock purchased in December and then only to imported and manufactured goods - which is to say that stock purchased from local distributors , for example, will not benefit from the "credit." And since the "credit" extends only to the end of March businessmen will obviously seek to dispose of their December stocks first leaving behind, in some cases, stock that may have been bought in October and November last year and for which no credit is available. It defies belief that every businessman across the country will be content to absorb the losses on those stocks.
This is just one example of an issue on which the GRA and sections of the business community have differences of opinion and the GRA ought to have anticipated that it would have to extend its public relations/public information and consultation exercise into the post-implementation period in order to deal with this and other concerns since, in the final analysis, the effectiveness of VAT will hinge on the preparedness of the business community and the consuming public to accept the new tax regime and collaborate with the GRA in its implementation.