VAT is not a new tax but will replace eight taxes that Guyanese consumers pay.

The taxes that VAT will replace are: 1. Consumption Tax – charged on most commodities and can be as high as 250 per cent although most items are taxed at 30 per cent.

2. Hotel Accommodation Tax - paid by those who utilise services offered by the hotels.

3. Telephone Tax - a monthly tax paid by consumers on their telephone bills at a rate of 10 per cent.

4. Purchase Tax - a tax levied on consumer goods. Purchase tax is calculated on the wholesale price and is paid by the wholesaler, who passes the cost on to the retailer, who in turn regains from the customer.

5. Service Tax - charged on services offered by some companies such as money transfer businesses.

6. Premium Tax - a tax imposed by the administration on the premium income earned by insurance companies.

7. Travel Voucher Tax - a 15 per cent tax paid by customers on air travel tickets.

8. Entertainment Tax - is usually incurred from appearances of foreign artistes and shows at events the public has to pay to attend.

Additionally, a number of items will be zero-rated which means these items will attract zero per cent VAT with effect from January 1, 2007.

These include basic food commodities - bread, rice, milk, sugar, onions - and educational services and materials; water and sewerage services, and locally produced building materials.

Under VAT a significant amount of consumer goods and services will become cheaper because they will be taxed at a rate of 16 per cent in comparison to what currently obtains -- an average of 30 per cent Consumption Tax.

GRA CALCULATION

Before VAT After VAT

TV cif 20,000 20,000

duty 0.2 4,000 4,000

24,000 24,000

c/tax 0.3 7,200 Vat 3,840 3,840

cif+duty/vat 31,200 Cif+duty(Without VAT) 24,000

markup 0.35 10,920 markup 0.35 8,400 1,344

selling price 42,120 Vat 1,754 5,184

selling price 34,154

Fridge cif 60,000 60,000

duty 0.2 12,000 12,000

72,000 72,000 c/tax 0.3 21,600 Vat 11,520 11,520

cif+duty/vat 93,600 Cif+duty(Without VAT) 72,000

markup 0.35 32,760 markup 0.35 25,200 4,032 selling price 126,360 Vat 5,261 15,552 selling price 102,461