Effect of new zero-rated items draws mixed reactions
“…is only dem big business could survive”
-small businessman
Kaieteur News
January 30, 2007
The Value Added Tax (VAT) Act Order which took effect from yesterday has drawn mixed reactions from the business community.
Minister of Finance, Dr. Ashni Singh published Saturday last in the Official Gazette the new list of items that attract a zero-rate.
Kaieteur News visited some of the businesses operating in the city and found that most entrepreneurs are happy to be able to sell more items at a reduced price with the hope of regaining lost patronage.
The only significant qualm that registered businesses expressed was the short time span they were given with which to reconfigure their computerised systems to facilitate the new list.
This has caused some confusion among some businesses that have had to resort to manual operations until the computers can be reconfigured.
When asked about items bought prior to yesterday which attracted tax and are now zero- rated, most businesses expressed confidence in Guyana Revenue Authority (GRA) to make compensation.
“It will not affect our profit margin since all VAT paid will be returned to us,” said one businessman.
Business persons who do not meet the $10M threshold and are not registered were outraged at the GRA.
“I hurry fuh get rid of my old stocks, at a loss, and buy back items which had VAT…now I got fuh drop de price again and mek another loss… is only dem big business could survive,” one non-registered business owner.
He added that just last week he purchased a host of items which attracted VAT and now that the items are zero-rated, the big businesses will be able to sell at a cheaper price since they can take off the VAT charge which he cannot afford to do.
Some small business owners are even contemplating closing shop; one person said that since January 1 his patronage has been substantially depleted and now that he is not fortunate to reduce prices he expects his business venture to fail. He continued that he is now considering leaving the country since he is not confident about his future.
One businessman reiterated that this is a blackmail strategy, saying, “all the people have to do is put pressure on the government and they will have to ‘zero-rate' some more items.”
Consumers on the other hand were delighted with the Minister's move to ‘zero-rate' some more items but some questioned why these items were not zero-rated in the first place.
Some of the items that now attract zero-rated status include uncooked birds' eggs, cooking salt, dried black-eye peas, locally produced jams, jellies or peanut butter, unflavoured cracker biscuits, but not including sweet biscuits, and a supply of matches.
Other items of note are preparations for oral or dental hygiene, including denture fixative pastes and powders, and yarn used to clean between the teeth (dental floss), toilet or medicated soap in bars, soap powder and dishwashing liquid, toilet tissue in rolls, and sanitary napkins.