Farmers and sawmillers do not pay VAT; they should be made to
Freddie Kissoon Column
Kaieteur News
January 12, 2007
Farmers, for a long time in this country, like the lawyers and doctors, did not pay taxes. They still don't. With VAT in full swing, all farmers and sawmillers should be compelled to pay VAT.
I once remarked to Fazal Alli (deceased, of the Guyana Rice Producers Association) on a television programme that farmers do not contribute to the country's revenue collection. I thought he would have agreed. He nonchalantly replied that farmers run the risk that if they lose their crops for the harvest then they go broke.
I couldn't see the relevance of that. If a public servant does not meet higher purchase payments, he/she loses the essential items they bought on credit. If a PAYE person gets sick, then they have to find a hospital bill. I couldn't see Alli's point.
The late Sash Sawh echoed the identical sentiment to me on television. But why are farmers the only persons whose non-contribution to the national treasury is justified because their investments are risky business? Life in itself is a risk.
The tax-evasion culture among farmers is absolutely unacceptable. This ought to change with the introduction of VAT. Take sawmillers. There should be an immediate investigation of these people. The government is getting the blame (some of which it deserves) for the rise in the cost-of-living caused by VAT, but some sections of the Guyanese economy are rapacious.
The sawmillers sell to the agents, who then sell to the furniture makers. Since VAT was about to come on stream, the price for furniture wood went up. Prior to VAT, it used to be $80 per square foot. That has now gone up to $100. Think of the hardship that the small furniture manufacturer has to go through now.
If he purchased 3,000 square feet of wood at $80, he paid $240,000. He now has to pay a whopping sum of $60,000 more, and that has nothing to do with VAT. Why the sudden increase?
Furniture for the poor family will cost more, not because of VAT, but because of unscrupulous people in the wood business.
The story of VAT has two sides. If you hate the government, then you will denounce VAT. But VAT has its strong points. VAT is a phenomenal break with the past. For this, we ought to recognise that Guyana will benefit as a country. Why, if we do not like the government, do we see everything it does as wrong?
What did we have before VAT? No one except the salaried employees and the big companies, like Banks DIH, DDL, and a few others, paid taxes to this country to keep it going. The self-employed are sadistic tax-cheaters. VAT is at least a small way of plugging the tax-evasion loophole. At least, we will get something from the farmers and the agents of the sawmills now that we have VAT.
Farmers who make wholesale purchases will have to pay VAT. Sawmillers must be told that they have to register.
It is unfortunate that the implementation of VAT has caused a small confrontation between the private sector and the state. Both of them have their own story to tell. There can be no doubt that the private sector is the fulcrum on which rests the future of Guyana . After the Hoyte presidency, the private sector rescued Guyana from the doldrums. Every Guyanese who now enjoys some satisfaction of being part of a modern Guyana should be grateful to the Guyanese community of investors.
But we, the citizens of this country, must never fall into the trap of thinking that these business people are angelic patriots and die-hard nationalists. They are not. Of course, there are good entrepreneurs and there are bad ones. Guyana certainly has its share of hard, exploitative business people. Just look at how they live. Just look at their assets. Yet, many of these people cheat on their taxes, contributing almost zero to the GRA.
Do you know that many of our business folk have migrated to Florida , where they have established business ventures with capital that they were shipping out of the country for decades?
This is a simple fact that is very easy to ascertain. Just go to certain cities in Florida and you will find them. Investing in Guyana and helping Guyana to grow does not give you license to rob the country. Even if you think that the PPP is not a good government, it still has to collect money to run the hospitals and pay the police and the soldiers.
Where is that money going to come from to alleviate poverty if investors ship the profits outside and defraud the tax collector?
There comes a time when any government of a poor country will have to lay down the rules. I believe VAT is a step in that direction. VAT will bring in revenue from people who paid no taxes before—people like the farmers. Also, those rich self-employed who evade the tax net will have to pay VAT when they buy their expensive foods and luxury items.
It is unfortunate the way the Government went about warning VAT defaulters. In the two instances where charges were laid, that was unacceptable rashness.
VAT had to have teething problems. Why then rush to prosecute commercial stores that made genuine mistakes? Although it wasn't a decision by the Cabinet but by the GRA, the President should have stepped in and have advised the GRA not to proceed against Muneshwer's and Mr. Northe.
In the case of the former, that family came back to Guyana and demonstrated business confidence in Guyana . If it did a wrong it must face the law, but not in the way it was done recently. As for Mr. Northe, he is a small businessman who, over the past two decades, persevered with his small investments.
The way the Government acted against the alleged VAT defaulters did give the impression that the business community in Guyana comprises heartless exploiters. That was a mistake, and it was wrong, though I believe that many in that sector are heartless exploiters.
My point is that the same vigour with which the GRA confronted the business class over VAT, the very GRA should apply the same vigour to certain sections of the self-employed category.
How can some self-employed people rise up overnight, have an amazing habit for capital accumulation, yet pay little, if any tax? How can some business people here in Guyana live like the rich of Europe yet pay less tax than a police constable? No wonder the police are always late to take on the violent gunmen. Guess why?