VAT adjustments to be made-- President
Guyana Chronicle
January 14, 2007
PRESIDENT Bharrat Jagdeo yesterday said the government will continue to examine and make adjustments as appropriate to the VAT regime, to ensure a smoother transition and to avoid negative impact on consumers.
In a statement, he said:
“I wish to make reference to my New Year’s message in which I had stated to the nation that with the implementation of the VAT our tax administration would be made much fairer, efficient and transparent.
This new tax reform measure will improve tax administration through replacing six taxes with the VAT and is intended to be revenue-neutral.
I further indicated that while some prices will see increases, a significant amount of goods should either experience no change in the price or see reduction because the government has zero-rated these items or reduced the taxes from 30% to 16%. I further expressed concerns that some elements of the business community may not pass on these benefits to consumers.
Two weeks into implementation we have observed that some of these concerns were justified. While some responsible elements of the private sector have sought to pass on the benefits of lower taxes to the consumer and we commend them for this, others have used various justifications for not passing on these benefits.
Some are claiming that they need to clear old stocks before the consumers will experience lower prices, while others have no justification for the excessive prices charged as in the case of increase of prices on zero-rated items.
For example, we have been told by one bakery that the price of a loaf of bread sold to his wholesaler before and after VAT remained at $152, and that the price paid before VAT by the retailers to the consumer was $180. That price has now risen in some cases to $220. Since bread is zero-rated, this is totally unjustified.
Various ministries of the Government, including Finance, Trade and Tourism and Industry, and the Guyana Revenue Authority will continue to monitor the situation and intensify their education and public relations campaign to the public, so that they will be more informed about the application of VAT.
We will continue to examine and make adjustments as appropriate to the VAT regime, to ensure a smoother transition and to avoid negative impact on consumers.
Currently we are seeking to make adjustments especially in areas impacting local manufacturing, selected food items and local air travel.”