Nobody will escape paying VAT on water, electricity – Opposition MPs

Dec 09, 2016 News

It has turned out to be one of the hardest proverbial pills to swallow since its announcement, and it is the firm position of Parliamentarians within the Opposition Party, the People’s Progressive Party Civic, that no Guyanese will escape paying the additional 14 per cent Value Added Tax on electricity and water bills exceeding $10,000 and $1,500 respectively.
The application of VAT on these two utility items was announced last two Mondays ago by Minister of Finance Winston Jordan during his 2017 budget speech presentation.
However, according to Opposition Member of Parliament Juan Edghill yesterday, the exemption of VAT means that the tax on inputs is borne by the trader, and if that trader is to sell to the public, he must pass on the tax on inputs to the customers or cut down on his factors of production, capital and labour.
Edghill defended his position during his contribution to the ongoing 2017 budget debates in the National Assembly.
He said, “In a simple example, the bread manufacturer would have been able to recover input VAT since his output was zero rated. Now that his output is exempted from the tax, he must absorb the VAT and only maintain his profitability by passing on the cost to consumers.”
Edghill also went on to critique the new tax regime which is expected to be instituted by the government in 2017. He quoted findings from a study done by Chartered Accountants, Ram and McRae, examining the changes to the total price of shopping lists for homes which will occur in 2017.
He said, “Following the announcement of the changes, the staff at Ram and McRae has applied the new arrangements to a most recent actual shopping list. Post-2017 budget where you will pay 14 per cent VAT on buying the same items, before VAT it will come up to $348,406 and the VAT you will have to pay is $37,575 because $80,000 of that amount is exempt.”
Edghill compared these calculations against the VAT regime which was in place by the PPP/C during its tenure in office. He said, “In the same basket that would cost before VAT, $348,406 because $253,985 was zero rated and $3,400 was exempt with 16 per cent VAT, you only paid $14,563.”
He said that when the VAT was 16 per cent, persons paid less when compared to having to pay the soon to be implemented 14 per cent tax.
Similar sentiments were expressed by Edghill’s fellow opposition colleague, Dharamkumar Seeraj who reiterated the point that nobody will be made to escape paying the VAT on water and electricity. He said that the government in drafting the budget did not make note of the severe hardships, economic problems and other adverse negative consequences which will flow from the budget.
In his argument, he used articles published in the media by the Upper Corentyne Chamber of Commerce, whom he said described the VAT on the utility items as reprehensible. Seeraj described the measure as a three-card trick to fool the populace.
He said that the government is looking to implement measures which will bring the greatest harm to Guyanese. According to Seeraj, no one will be spared except those in government.
Seeraj urged that all the unsettling issues within the budget be resolved by seeking assistance from the PPP/C, particularly the leader of the opposition, Bharrat Jagdeo. However, when government was preparing the budget, the PPP/C did not facilitate any consultation on the matter.

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