GRA boss slams 'Beat the VAT' ads
-says all set for January 1 implementation
(Nicosia Smith)
Stabroek News
November 15, 2006
Khurshid Sattaur
With questions still continuing over the country's preparedness for the Value Added Tax (VAT), Commissioner General of the Guyana Revenue Authority (GRA) Khurshid Sattaur yesterday called a press conference to flay advertisements telling customers to 'Beat the VAT' by shopping now and he later told Stabroek News that everything is in place for the tax from January 1.
He charged that the ads were "driving fear of higher prices" in the face of plans for the implementation of the tax from January 1.
The Commissioner maintained at a press conference held at GRA headquarters on Lamaha and East streets yesterday that on average a basket of goods will be reduced when VAT is charged at 16% come January.
"I must stress that on an average, consumers are expected to spend less for a basket of goods when VAT is implemented at a rate of 16 percent as compared to what currently exists," stated Sattaur in a prepared statement. The Commissioner also said that the cost of living is not likely to differ significantly.
Even as the Commissioner reiterated this, he said that a policy decision is still be made on basic food items that will be zero rated or exempted. Currently, rice, salt, split peas, potatoes, onion, garlic and oil which do not attract consumption tax will face 16% VAT and flour which has a 10% consumption tax will also face VAT.
He stated that he could not give a deadline as to when a list of basic food items that will not carry VAT will be produced, but told the media that even if it is revealed on December 31, this would not be too late. In relation to how stock on hand would be treated, another major concern of businesses, Sattaur again said that the government is addressing this and there will be a pronouncement on the issue, but a time frame was not stated.
Some analysts have said that the price of food based on several baskets is likely to rise with the institution of VAT. There have also been complaints that the GRA did not have all of the required forms for VAT available and that staff at the VAT unit could not answer some of the questions posed to them. Sattaur did not deal with these concerns.
Malicious business practice
The Commissioner told the media that those businesses "through sales campaigns are misleading consumers into believing that prices for items sold now will increase come January 1."
"The Government of Guyana and GRA do not view this as only a misrepresentation of the effects and benefits of the VAT, but also as a malicious business practice, especially since several of the items advertised are currently attracting 30 percent Consumption Tax (C/Tax) and VAT, which is only 16 percent, will replace the C/Tax. This means that prices for some of the very items advertised should actually be reduced when VAT is introduced."
Cheaper with VAT
Sattaur noted that some of these items that currently have a higher tax rate than 16% like furniture, household and electrical items will be cheaper when VAT is implemented.
He believes that, "VAT is a test of the integrity of businesses," adding that he was "appealing for good judgment to prevail." Nevertheless, he noted that "the Authority has confidence that Guyanese businesses will maintain their integrity as Guyana introduces VAT which is aimed at ensuring a greater degree of fairness and efficiency in Guyana's tax system." The GRA said that VAT can only be charged when the tax is implemented and not before.
The GRA is targeting 2,500 businesses which meet and pass the $10M threshold for VAT registration and of this number less than 10% have completed registration, according to the GRA.
Sattaur speaking about the registration, noted that they are, "not very overwhelmed with the response received so far," but added that some positive changes have been experienced over the last couple of days.
VAT date
Stabroek News inquired from the Commissioner if VAT will be deferred, and the Commissioner responded that, "people are hoping that VAT would never occur," adding that the GRA has everything streamlined to implement the tax come January.
The staff of the GRA is also visiting businesses from the 2,500 that were sent registration packages to explain and go through the registration process with them.
He also believed that more businesses would subscribe to the tax once it is implemented. Sattaur also indicated that the public campaign will be further intensified when the government releases the list of basic food items that will not attract VAT.
No price controls
The GRA is also depending on the public to monitor how VAT is implemented by the businesses, in terms of ensuring price stability. The Commissioner noted that they will not go back to the days of price controls.
"The public at large have to be their own police on the VAT," said Sattaur, noting that consumer affairs associations will also help in this regard.
The Commissioner also reminded that registered businesses will be able to recover VAT paid on inputs used in their business, such as stock, raw materials, fuel, telephone expenses, advertisements, maintenance, and service fees. In the current tax system, businesses are not able to reclaim the C/Tax paid.
Eight taxes will be replaced by VAT and these are: Consumption Tax; Travel Voucher Tax; Service Tax; Premium Tax; Hotel Accom-modation Tax; Entertainment Tax; Purchase Tax and Telephone Tax.