Being too harsh with VAT defaulters
Editorial
Kaieteur News
January 7, 2007
The Value Added Tax (VAT) is six days old. January 1 was a holiday, so a huge part of commercial Guyana did not engage in business. Within that brief period, it is difficult to imagine the many dimensions of VAT being comprehended by both seller and buyer, and quite frankly they have not been. This is a new phenomenon introduced into the economy and it will take time to surmount its complexities.
For this reason, we think it is too draconian a measure to seek to prosecute defaulters at this time. Innocent mistakes are being made. Some people are of the view that VAT should have been postponed until late this year so that full understanding of its meaning and function could be achieved.
Notwithstanding that, it is obligatory on all VAT-registered business houses to come clean and fair when applying VAT to their customers. But with VAT in its infancy, is it not possible for genuine mistakes to be made?
The move to drag certain businesses before the courts should be looked at again. The very GRA that is taking this inflexible stand showed more tolerance in the duty-free scam in 2004.
After it was discovered that more than 50 persons secured duty-free vehicles by orthodox procedures, the GRA sought to have the guilty parties prosecuted. But no one ever was brought before the courts. The GRA announced an amnesty plan. It asked the erring owners to come in and settle with the valuation department. Many came forward and paid the duties.
We can say, then, that the GRA created a precedent. Why this rush then to charge those that may not have implemented VAT without adhering to the strict legal guidelines? We repeat for the third time; why couldn't a genuine mistake be made? The forceful move against these business places may send the wrong signal.
In many quarters, there is the residual feeling that the government distrusts the business world. No matter how much the government has done for investors and endorses the principle of entrepreneurship, once the government gets into a confrontation with business people and it leads to the doorstep of the courts, then these old suspicions come to the surface.
We recognize that this Government has had a sound and appreciative record in its facilitation of both small and large investors. To argue with that is like pushing an open door. However, the hurry to denounce and charge businessmen, some of whom have served this country patriotically, six days after VAT is up and running, sends mixed signals.
We urge a reconsideration of the charges. In many instances the violations were hardly shocking. In none of the incidents, were substantial sums involved. On the contrary, they were indeed small by comparison.
It is highly unlikely that well established and reputable multi billion-dollar entities in some cases, would resort to penny-pinching to satisfy any intended fiscal target.
In one situation, a certain well-known official at one of the leading Government Ministries went too late to make a purchase at a major establishment. Since all the computerised systems were closed for that day he was facilitated, but his receipt was dated for the next day with VAT included.
This is a common situation with automated machines. If you go to the ATM of any commercial bank after a certain hour, the receipt is dated for the next day.
This was an isolated case involving a mega-firm in Guyana. We fail to see why this company would risk its hard-earned reputation by blatantly defrauding someone of a few hundred dollars.
VAT has teething problems. That is expected. We urge the GRA to be understanding. Business people are doing their part to make Guyana work
Indeed there are some who are unscrupulous and we appreciate the efforts to get them to comply. We appreciate the tolerance with the small businesses largely because there was no emphasis on them to keep records. But in the same token we expect some tolerance with those big businesses because they too were allowed to continue sometimes questionable practices that have become a habit. They need tome to change.