GRA again denies higher prices due to VAT
Stabroek News
May 12, 2007
The Guyana Revenue Authority (GRA) yesterday again denied that the Value Added Tax (VAT) has increased the cost of living and says there needs to be adequate time before a comprehensive analysis of VAT and Excise Tax revenue can be done.
The statement from the GRA was in response to a news item in yesterday's edition of Stabroek News which said that VAT and Excise Tax collected by the GRA for the first quarter this year was 44.14% above projection.
GRA Commissioner-General Khurshid Sattaur said in the press release that the figures published by Stabroek News "do not explain anything" and "it does not say whether those figures are gross or net figures." Sattaur had been shown these figures on Thursday prior to the publication of the news item but declined to comment. This was also the case for Finance Minister Dr Ashni Singh.
In yesterday's statement, Sattaur did not offer to verify whether the figures are gross or net but noted that VAT collection has to be weighed against the level of refunds since VAT allows for input tax credit where the VAT registrant is allowed to offset all of his VAT on purchases from the VAT collected. For the month of January around 550 persons claimed VAT refunds and the GRA said that these claims would be subject to an audit and had added that it was alarmed by this large number of refund claims. Sources say that refunds for the first quarter are not expected to be very large.
The document from the GRA which Stabroek News used for the news item, showed that VAT and ET collections for January were projected at $1.245B, for February $1.792B and March $2.053B, but the actual collections were $1,251B, $2.658B and $3.429B respectively.
Sattaur went on to label the Stabroek News report as "obviously misguided and it is sad that it does not in any way help the general public's perception of the VAT but only serves to create mischief."
But the Commissioner then went on to say that if the figures were positive, "it reflects that the VAT is achieving its objectives." The release did not hint at any reconsideration of the government's position on VAT, namely to reduce the rate from 16% or to zero-rate additional items.
The GRA Commissioner mentioned that there needs to be adequate time to do a comprehensive analysis of the revenue collected via VAT and ET, taking all of the associated factors into consideration.
"The GRA, from its own analysis and calculation of prices before and after VAT, maintains that overall prices should remain stable."
"It is the market forces (that) determine prices in a free economy and the GRA believes that this has contributed to increased prices together with the fact that persons who previously cheated the system by under-invoicing will no longer be able to do so easily."
The GRA continues to maintain that it will be difficult to cheat the VAT system and asserted that those who were previously under-invoicing and cheating the tax system would be captured by VAT.
Finance Minister Dr Singh in a separate press release via the Government Information Agency noted that the "window period allowed for the implementation of the Value Added Tax (VAT) system has been too short to fully analyze and draw conclusions on the effects and benefits of the new taxation system."
VAT was implemented in January this year and there are many factors to consider, said the minister. He said the first quarter was unusual since significant activities were held, including Cricket World Cup.
He also said that the claims that prices of certain commodities have increased two-fold are not necessarily attributable to VAT since the rate charged is set at 16%. And for zero-rated items that have increased he noted that this cannot be blamed on VAT since there are other reasons to consider including developments on the world market, prices of imports and business persons' non-adherence to the conditions of VAT.