Zero-rated 40 unveiled
-includes dried blackeye, meats, eggs, cooking oil
By Nicosia Smith
Stabroek News
January 27, 2007
Finance Minister Dr. Ashni Singh last night unveiled a list of 40 more zero-rated items including dried blackeye peas, cooking salt, all locally produced uncooked meats including salted fish, sanitary napkins and local river and air transport.
The additions came after weeks of dissent over a VAT-fuelled cost of living rise. However, vitamins, tonics and food supplements were excluded from the newly zero-rated list, but internet service will be added to the roll subject to an agreement between the internet service providers and the government.
During a press conference at NCN, Dr. Singh said that he was signing the order into law last night and from Monday businesses would be expected to remove the VAT being charged on these items.
Under the VAT (Amendment) Act 2007 passed recently, which repealed Section 98 of the Principal Act and re-enacted it: "The Minister may by order, subject to negative resolution of the National Assembly, amend Schedules 1 and 11", of the VAT Act that deals with zero-rated and exempt items respectively.
The amendment also states that the Minister may by order, subject to affirmative resolution of the National Assembly - (a) increase or decrease any monetary amount set out in this Act and (b) amend Schedules 111, 1V and V.
The order for this additional zero-rating is expected to be gazetted today.
Among the other newly zero-rated items are matches, eggs, soap, margarine, locally produced jams and jellies, all cooking oils including olive oil, soap powder, toilet paper, preparations for oral or dental hygiene, including denture fixative pastes and powders, toothpaste and dental floss.
The Finance Minister said with the zero-rating of these items he expects a reduction in their prices and feels that with time and competition prices will settle. "We are optimistic that prices will settle."
In the agriculture sector, fertilizers, pesticides, vegetable seeds, knotted netting of twine, cordage or rope, made up fishing nets and other made up nets of textile materials will be zero-rated. Also on the list are fungicides, herbicides, weedicides for agriculture purposes; harrows, cultivators, scarifiers, ploughs, weeders and hoes and machinery used for preparing animal feeding stuff.
Poultry feed producers have complained that ingredients for poultry feed like soy meal and corn were liable to VAT, but the completed poultry feed was not. Under these new amendments poultry feed, animal feed (not including pet feed) and the ingredients as determined by the Commissioner will be zero rated.
Medical services and prescription drugs, to the extent provided in regulations issued by the Minister, and over-the-counter drugs, but not including vitamins, tonics, energy drinks, food supplements and similar products and supplements for promoting health and well-being will be zero-rated. In addition, veterinary drugs as determined by the Commissioner will be zero-rated along with optometric services and spectacles prescribed for the human eye and visual system.
Ink cartridges for computers will also be zero-rated along with plywood.
On Thursday, President Bharrat Jagdeo had announced that meats, toothpaste, local clothing, eggs and soap powder were among the additional 40 consumer items to be zero-rated.
Some 10 basic food items like rice, sugar, oil and milk were already zero-rated in an amendment to the VAT Act of 2005 on December 14, 2006, but items like matches, salt, meats, biscuits and toilet paper were not zero rated and these items also did not previously attract Consumption Tax (c-Tax).
The President had said too that with the zero-rating of these additional items the government anticipates that some of these items should be sold at prices lower than last year, inclusive of VAT.
Over the past weeks, said the President, the government had identified food items, where prices have moved upward and with the zero-rating of these additional items there will be no excuse for businesses to increase prices.
Since VAT was implemented on January 1, consumers have faced increased prices at variety shops, municipal markets and at supermarkets. This development has had an adverse impact on businesses in the city and outlying areas, and many are reporting decreased sales. Consumers continue to complain after almost a month into the implementation of the tax that the government had said that the implementation of VAT would bring lower prices but to date it is the opposite.
The government, the President said, had expected some transitional difficulties, but noted that VAT was unscrupulously implemented in many quarters.
The president had also said that the government with the VAT tax, aimed to make it a broad-based, fair and transparent tax, and to this end removed six taxes namely the Entertainment Tax, Telephone Tax, Service Tax, Hotel Accommodation Tax, c-Tax and the Purchase Tax.
The head of state also mentioned that over 460 categories of items were reduced from 30% (c-Tax) to 16% (VAT), while some 100 plus categories that attracted 10% c-Tax increased as a result of VAT. But for the first time, the president said consumers will be seeing the taxes that they are paying. He said too that the government recognized that the prices of items that were previously 10% will increase.