The consumers need help
Editorial
Kaieteur News
January 8, 2007
The past week was distressing and frustrating for shoppers and businesses alike. It was the week that Guyana began imposing the value added tax (VAT) and in the process, ensuring that the government coffers their fair share of all revenues intended to be collected.
For the first time the businesses are forced to correctly state their revenues, a far cry from the time when the business community simply paid income tax on whatever they believed they should. Some kept two books in the event that the tax officials visited and sought an inspection.
This attitude of seeking to dodge paying taxes must have played a key role in the ensuing confusion as business places attempted to implement the VAT. Some must have had their profit margin uppermost in their minds when they began charging VAT.
But then again, the issue of the mathematics would have played heavily on these business people. In this country, the most basic of mathematics problem poses a headache for many. And today, even among children, this subject area is a nightmare. Merely mention mathematics and children would believe that one is taking them to the gallows.
Understandably, many of the business houses simply applied a 16 per cent increase to their existing prices. The Guyana Revenue Authority has since described this action as unconscionable because those business houses who have registered will get back from the government 16 per cent on the consumption tax they paid on goods imported in December and remained as stock on hand.
It goes without saying that such a practice would have resulted in a windfall for those businesses because in addition to the refund from the government they would have collected a ton of money from the consumer.
The GRA is recommending that the business houses refund the people monies overcharged but this is not going to happen for many reasons. In the first instance, the buying public tends to behave sheepishly when the members have to represent their interest. Then there are the shopkeepers and businessmen who would insist that they will not refund any money and challenge the buyer to take them to court.
It is this attitude that has led to the hostility on the part of the businessmen to the visiting VAT teams. The business community sees the teams as nuisances and as intruders in the normal life of the business.
Meanwhile, as the society tries to come to grips with the VAT payments, many people are at their wits end to make ends meet. Some people went to the stores and shops with a sum of money to make purchases only to find themselves woefully short.
The GRA says that the prices should go down, that there should be no rise in the cost of living. However nothing seems to be further from the truth at this time. One businessman said that prices must rise.
He points to the 16 per cent that the importer would charge which the government collects at source. Then there is the 16 per cent that the distributor must pay to the importer and which he must also pass on to the retailer who must also pay VAT.
The business said that the government will collect two sets of value added tax, something that is bound to impact on the cost of living. What is certainly pushing up the prices and the cost of living is the increased cost of even the most basic of fast foods and restaurant meals.
Operators of public transport want to hike their prices. They cannot charge VAT because they have not registered but there is nothing to stop them from hiking their prices because, as they say, the cost of spares and accessories has gone up by 16 per cent.
Needless to say this will hurt as the consumer finds himself having to pay more in the shop and more for transportation.
It will be some time before the VAT charges are regularised but until then the consumers are going to feel the brunt. This will have an impact on production in the offices as was evident last week. It could also see a decline in attendance at school.
That is why everyone wants the GRA to pull out the stops and ensure that the proper calculations are made and that people pay no more than they should.