Jul 07, 2016 News
During its election campaign, the APNU+AFC coalition promised a reduction in Value Added Tax (VAT). But it is more than a year later since it has been in office and this is yet to be done.
Is it therefore safe to conclude that this was a mere election publicity stunt? According to President David Granger, it was not.
On the television programme, the Public Interest, the Head of State explained his position on the issue and what were some of the challenges encountered when it came to honouring this “100-day” promise.
Granger reminded that there has been a review of the entire taxation policy by his Government. He noted that since Government is hopeful to present the budget in December, it is possible that VAT reduction could be featured there.
The President added that when he took office, his Government was faced with a number of unexpected issues. He listed one of these to be the need to find about $10B to bail out the Guyana Sugar Corporation (GuySuCo).
The Head of State asserted, “It is a major problem and there are other areas we need to give money to such as in education but we have not been able to reduce VAT because the money is not there.”
Granger added, “… It is not as easy as it looks and perhaps it might have been imprudent to give ourselves a commitment at that point in time but I will say that philosophically, it is something we could achieve, but not now.”
Kaieteur News understands that the Tax Reform Committee which was established in August 2015, had until December 2015, to produce an interim report from which provisions/announcements could be made in the 2016 National Budget. However, the report was not submitted.
A further extension for the first week in January last was requested and granted. But even this was not met.
The Tax Review Committee was chaired by Economist, Dr. Maurice Odle, and included tax specialists Christopher Ram, Godfrey Statia and Dr. Thomas Singh.
Finance Minister, Winston Jordan, said that the Committee had been given its Terms of Reference (TOR) to guide its work which includes investigating and inquiring into the state of taxation, to review the taxes with a view to achieving a number of objectives and to look at the administration of taxes with a view to bringing about efficiency, and rationalization.
“We are aiming to look after all taxes, their structure, their functions, objectives, equity, incidence and fairness, and essentially how these taxes are administered because that’s a major issue.
“I want taxpayers to feel that they can pay taxes because they have a friendly tax service.
“We want a system that is fair and firm and one that doesn’t exempt friends of the Government, friends of the tax commissioner. It should be seen by all as fair as it is applied all across the board. It has a rigorous legal system in place that can go after tax dodgers, tax cheats,” the Minister had stated.
According to the Minister, the committee not only looked at how to reduce the Value Added Tax, but will also be examining all taxes with a view of relieving the burden on the population.
“We are going to do tax administration and taxation in a systemic way, informed by evidence, and not necessarily being pushed by moral and other considerations, so this committee represents the first step in doing that,” Minister Jordan said.
Jordan explained that while Government promised to reduce VAT it was found that it could not be done so immediately.
“It would have been highly irresponsible for us to just come in, take a major tax category like VAT and just proceed to reduce it, in the hope that it would meet some objective or criteria earlier stated,” the Finance Minister said.
Opposition Leader, Bharrat Jagdeo, intimated to Kaieteur News during a recent interview that he believes that the government’s manifesto promises, one of which includes the reduction of VAT, were positive and designed to bring benefits to the people.
“We will not stand in any way against benefits going to the ordinary Guyanese.”
However, the Opposition Leader said that he is disappointed that Government is yet to reduce the Value Added Tax (VAT). He reminded that Government said it would be guided by a Committee which was established to look at this, but it has been some five months now since the establishment of the Committee, and not a single word has been said on it.
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