Dear Editor,

I see with the implementation of VAT, the business community is coming out to say that the GRA was misleading us about 30 percent C-Tax items only.

As I understand it from the GRA, and I will believe the GRA because it is the official tax authority, the truth of the matter is that even though there were some items taxed at 10 percent and some at zero percent, while those businesses paid only 10 percent that was part of their cost and therefore it was reflected in their prices.

VAT does not tax businesses and therefore while they only paid 10 percent they will be recovering the now 16 percent. If you look at it holistically, if businesses are recovering their VAT (which was never that way) their general costs will be less, whether they are selling 10 percent items, 30 percent items or zero-rated items, and therefore they should be offering us consumers lower prices.

Old stock: some businesses are saying because they have no relief they can’t reduce their prices. Let’s look at it this way. Its the same old stock businesses are now selling, the last year prices took into consideration all their overhead expenses from last year including items and or services for which they had to pay tax at different rates but for which there was no relief unless we consumers bought them. Businesses need to relook at their pricing and be fair to consumers

Yours faithfully,

Ruth Gomes

Editor’s note

The issue, surely, is if the output VAT paid on sales of the product, e.g. a newspaper, exceeds the input VAT paid on the import of newsprint the price has to be increased to cover it or the business will take a loss if it absorbs it.