Chamber wants meeting with Ashni Singh to end VAT 'chaos', bring relief
-discusses problems with GRA
Stabroek News
January 10, 2007
The flare-up over the Value Added Tax (VAT) between the private sector and the GRA subsided somewhat yesterday following a meeting between the two but the Georgetown Chamber also signalled it would seek an urgent audience with the Finance Minister to end the VAT "chaos" and bring relief to consumers.
According to a Chamber statement yesterday following the meeting, the Guyana Revenue Authority (GRA) has agreed to reconsider the decision to file charges against Muneshwer's Ltd and NP Department Store for alleged VAT invoicing violations.
And in its own press statement issued after the two-hour meeting, the GRA admitted that prices of items which previously attracted a 10% consumption tax (c-tax) will increase. The meeting, which saw participation by Commissioner General of the GRA Khurshid Sattaur and staff, and representatives of the Georgetown Chamber of Commerce and Industry (GCCI) and the Private Sector Commission (PSC), was held at the GCCI headquarters yesterday.
"GRA wishes to put on record that the VAT implementation process has encountered glitches that are preventing its successful implementation. Until [these glitches can be overcome], the public will not benefit entirely from lower prices which will accompany the VAT. There are some items that are also likely to be more expensive since VAT, at the rate of 16%, replaces taxes that were charged previously at the rate of 10%," the GRA said in its statement. Consumers are now faced with higher prices for items such as meat, matches, salt, table napkins, flavoured milk, margarine, paper towels and soaps and detergent all of which previously attracted no c-tax and sardines which attracted 10% c-tax.
Household items like carpets, electrical appliances, furniture, wigs and cosmetics attracted 30% c-tax and are expected to be cheaper. Imported mixed vegetables, tomato paste and imported vegetables like broccoli will be cheaper as well.
According to the GRA: "Members of the private sector bodies reiterated their commitment to the introduction of the VAT but expressed concern over their ability to reduce the price of products which were imported prior to December and items previously attracting 10% and less consumption tax."
However, as consumers face increased prices at the shops and supermarkets the GRA reiterated that the government's stock relief for December stock was intended to relieve the impact on consumers. "The government's decisionā€¦was based on best practices, the affordability and empirical data relating to stockā€¦it was expected that businesses would emulate this move in the interest of their consumers," GRA contended.
Businesses continue to complain that they cannot by themselves bear the cost for stock bought before December and as such have passed that cost onto the consumer.
"We maintain that a steady rate of consumption of commodities is key to the seamless transition to the VAT regime. Otherwise, businesses stand to lose patronage from their consumers and thereby revenue," the release said.
The GRA said it will continue to engage the business community and "maintains its primary mandate to administer the VAT effectively. In so doing we give prominence and respect to the market force and we encourage consumers to exercise their right, express their preference in the free market."
The GRA said it will continue to recognize and commend members of the business community for assisting the GRA and speak out concerning the unfair business practices of businesses.
It added: "GRA is acutely aware of the major levels of under-invoicing by some of the most prominent businesses of this country.
"VAT not only promises to affect the way the businesses of this country behaveā€¦ but for the first time imposes a most comprehensive audit trail that allows the GRA to better police its laws against taxpayers who over the years have benefited enormously from the countless millions they have evaded as taxes."
Honest taxpayers
In a prepared statement read at a press conference yesterday afternoon, the GCCI highlighted four major issues that the chamber discussed with the GRA: statements by the commissioner calling businesses "crooks" and "bandits"; holding the business community totally responsible for price increases; the misleading public relations campaign; and the legal action against the two members of the business community.
Chartered Accountant Christopher Ram who read the statement pointed out that, "the several statements made by the commissioner general and to a lesser extent the government casting private sector operators as 'crooks' and 'bandits', for their failure to comply with the tax" are not only incorrect and misguided but are unfair to hundreds of honest taxpayers.
Ram said that at the meeting Sattaur apologized to representatives of the chamber 'who were around the table' and specifically to Banks DIH Ltd which was not represented. The chamber urged that a wider public apology be made.
The chamber pointed out to the commissioner that while VAT replaced six other taxes "it has imposed taxes on several goods including a range of food items, beverages and items for business use and services such asā€¦certain services offered by the commercial banks."
Credit for inventory was not left out and the chamber also pointed out to the commissioner that, "the business community could not be expected to take losses on all pre-December inventory; on all inventory on which consumption tax is more than 16%...(and) on all December inventory not sold by 31 March 2007."
Ram said the GRA was still, "tinkering with the laws weeks before implementation." This statement was made in relation to the GRA noting that the business community was guilty of inadequate preparation for the implementation of VAT and the GRA was faulted for not responding to recommendations and suggestions over a year ago by the private sector.
In addition, it was mentioned that the late decision on the printing, numbering and use of invoices also affected the business community's preparations. Noting the public assurance that the GRA would apply the law in a "business friendly" manner, the chamber labelled the charges bought against the two businesses as "premature".
"The Chamber therefore urged the GRA to resolve these cases outside the court system having regard to section 79 A of the VAT Act which provides that 'in so far as circumstances permit the provisions of this Division [Division 11 of the Act relating to Civil Penalties] should first be utilized." (See other story on page 10.)
The Chamber is also planning to meet Finance Minister Ashni Singh to bring relief to the consumers and "to stem the chaos that has enveloped the introduction of VAT."
The PSC is expected to issue a statement shortly on the VAT implementation process.