Release the Vat
Alliance for Change Column
Kaieteur News
January 21, 2007

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The Alliance For Change's request, made through Mr. Raphael Trotman, to have an urgent debate on the Value Added Tax (VAT) was disallowed by the Deputy Speaker on the basis that the matter cannot be deemed an urgent matter for discussion.

The Speaker reasoned that, because VAT has been introduced since January 1, a motion to debate its effects should have been considered for the Parliamentary sitting on January 11.

In addition, the fact that the government introduced the Value Added (Amendment) Bill means that some of the concerns deemed urgent and critical by members of the public will likely be addressed.

The AFC respects the ruling of the Hon. Deputy Speaker, Mrs. Clarissa Riehl, but had hoped that a different view would have been taken, especially in light of the fact that new issues and difficulties are emerging by the hour regarding VAT.

The AFC continues to believe that the application of VAT will be a cause for concern, and notwithstanding the ruling in the National Assembly, will continue to press for an amelioration of the harsh conditions ordinary Guyanese now face.

As we are all aware, VAT has been introduced, and in the weeks since its introduction, there has been a climate of confusion and alarm among consumers.

Confusion because there was not sufficient consumer education prior to the introduction of the tax, and alarm because consumers find themselves faced with what appears to be a 16 per cent cost of living increase as of January 1, of this year.

These issues include the fact that there is no provision in the VAT regulations to prevent businesses from adding VAT to existing prices or increasing current prices before applying the tax.

Stock relief is being granted only to importers and manufacturers, and not to retailers. Further, businesses are not being granted stock relief for stock purchased before December last year, and they have only until March to dispose of their December stock in order to benefit from stock relief.

This means that many businesses will face losses on unsold December stock, and for stock purchased before December, if they were to lower prices immediately.

It is the nature of business that they must do what they have to do to minimise losses, and unfortunately, this means higher prices for the consumer.

The source said that in the immediate term, consumers will therefore continue to feel the effects of these types of problems, since they cannot pass on the additional charges associated with the new tax.

The ordinary Guyanese is at the end of the line as usual. As this realisation dawns, the consuming public is rightly becoming more and more alarmed.

In December of 2005, the Private Sector Commission pointed out that Guyana has the highest personal and corporate tax rates in the Caribbean, and opined that the introduction of VAT at a rate of 16 per cent and a threshold set at $10M would place an enormous tax burden on the Guyanese consumer and a terrible strain on the country's manufacturing, business, tourism, and export sectors.

The Private Sector Commission stated that VAT must be introduced in conjunction with a reform of the existing tax system. They further stated that the tax in its present form would result in a significant increase in the cost of living to the average consumer.

Red Thread is a civil society organisation that speaks for women around the country. It has also expressed concerns with respect to the likely effects of VAT on Guyanese people in general, and more specifically on unwaged housewives, low-waged workers, unemployed women and men, and pensioners.

Their concerns have also now come to pass. They have expressed concern about prices that have increased on items that previously had no consumption tax, or consumption tax lower than 16 per cent, but are now subject to VAT.

They also called for basic food items that are now subject to VAT to be zero rated, saying that applying VAT to these items is an extreme burden to the poor. These items include salt, flour, biscuits, margarine, eggs, beef, pork, fish, black eye peas, pigeon peas, channa, jam and jelly, matches, soap, school clothes, and telephone calls. Other items that should not be subject to VAT include toothpaste, sanitary napkins, and tampons.

The President and the GRA have given assurances that VAT should not result in a higher cost of living. Consumers and civil society organisations are clear that they are feeling the pinch since the introduction of VAT.

In a country where many people are already forced to work more than one job, or to rely on remittances from relatives who live abroad, it is imperative that we recognise that the consumer is being further burdened.

It would therefore seem appropriate that, as suggested in the press and by organisations and individuals, the government revisits the basic goods and services that are purchased primarily by the lower income consumer, and ensure that they are zero rated.

This will give some relief to housewives, low wage earners, unemployed and underemployed people, and pensioners.

It would also seem appropriate that the government undertake a survey of pre and post-VAT prices to determine whether VAT has resulted in a significant cost of living increase.

If this is found to be so, then it is only right that the VAT Rate be adjusted, or that the government provides tax relief in some other form to ease the burden on consumers. The Guyanese people deserve no less.

QUESTIONS SUBMITTED FOR ANSWER

BY MINISTER OF HOME AFFAIRS:

1. Will the Hon. Minister of Home Affairs state the circumstances surrounding the prison break at the Mazaruni Prison on Friday, January 12, 2007, and which led to the escape of 9 prisoners?

2. What measures have been put in place to address safety and security generally at all prisons in Guyana and to prevent jail breaks in particular?

3. Can the Honourable Minister state specifically what recommendations, if any, of past Commissions of Enquiry into jail breaks within the last ten years have been implemented?

4. In light of the recent jail break at the Mazaruni prison, is the Minister of Home Affairs willing to seek a reconsideration of his government's decision not to construct a new maximum security prison?