Deal condignly with VAT cheats
Editorial
Kaieteur News
January 4, 2007
Last week President Bharrat Jagdeo announced that contrary to stated views, the Value Added Tax (VAT) was never intended to bolster the government coffers. And he, like Head of the Guyana Revenue Authority, Khurshid Sattaur, and Finance Minister Dr. Ashni Singh were prepared to put their heads on a block to guarantee that there would be no rise in the cost of living when VAT comes on stream.
However, if one were to take the happenings of the first business day in the country then one would be left with no option than to conclude that just about everything being sold here would cost more. Indeed shoppers were quite vocal because they had grown accustomed to spending a certain sum of money to acquire some goods.
On Tuesday they found that they did not have nearly enough money. Many of those who had gone to the supermarkets were forced to return goods to the shelves. VAT had sent the prices through the roof.
Our initial fears that the system did not have enough people to monitor the actions of the business community with the implementation of VAT proved accurate. Although the introduction of VAT was announced a long time, and although the Guyana Revenue Authority had set up special units and hosted various forums to promote the system, the word was that enough was not being done.
And so it was. Despite the talks and the forums and the meetings, many did not know what to do. There were those who simply decided that the time was right to capitalize on their earnings—to maximize their profits because they know that the system is such that they would be able to escape paying over to the government all that is due to it when the time comes.
And indeed we in this country have grown accustomed to being notorious tax dodgers, to such an extent, that ever so often the Guyana Revenue Authority, the National Insurance Scheme and even the commercial banks must move to the courts to seek relief. With the introduction of VAT these businessmen must have recognized another chance to collect money without having to account for it.
But the government appears to be adamant that everyone who is registered to collect VAT and who collects VAT must pay or go to jail. The Finance Minister is busy sending the message that any skullduggery would land the perpetrator in jail. And so it was that the Guyana Revenue Authority, the Trade Ministry and the Finance Ministry were out in force—a force that appeared to be sadly lacking.
The findings have not been heartening. Some companies simply applied the 16 per cent to the prices at December 31, 2006. Even small businesses not registered began to charge VAT on such condiments as plantain chips, potato balls, corn curls and the like.
There is an insistence on the part of the government that competition will force the prices downward but experiences have taught that others simply follow and before long the price would be higher. There will be competition, but for prices higher than before the VAT was implemented, erroneously or correctly.
Entities like the television stations and newspapers are now required to charge VAT. The newspapers have already begun to charge VAT on their advertisements. This was a grey area until the authorities contend that advertising is a service that must attract VAT.
Television stations that fight among themselves for scarce advertising are being asked to hike their rates to accommodate VAT. Advertising is often the first thing to be cut when businesses face a crunch. There is no broadcast legislation to dictate the upper and lower costs of advertisements so it is going to be interesting to see how the television stations fare.
But for all this, we expect there to be a leveling off and a regularizing, because people are not going to stand idly by while they are being fleeced. To help their cause, the government is promising to publish the names of those businesses that insist on operating outside the pale. But for now there is confusion; shoppers are paying closer attention to what they buy and how much they pay, but there are still businesses that often resort to threats knowing that they have certain items that may be very scarce at other locations.
And given the slow nature of the courts those charged could avoid being brought to book years later. This alone is incentive to continue to act illegally. We do hope that the problems that surface now are nipped in the bud and where necessary condign action is taken.