The Private Sector Commis-sion (PSC) has expressed satisfaction with the 5.8% growth rate in the first half of this year and has urged the government to use the surplus VAT revenue collected to reform the rest of the tax system and give consideration to the lowering of income and corporate taxes in particular.

These views were expressed by the PSC in a meeting on Wednesday with Minister of Finance Dr Ashni Singh.

In a release issued yesterday, the PSC said the two sides met as part of the Commission’s ongoing engagement with the government on matters of shared interest.

The PSC said it was satisfied with the 5.8% growth rate recently revealed in the government’s mid-year report and “expressed its desire for the realization of growth targets of between five and ten percent in the future”. The umbrella private sector body said that it pledged to work closely with the government to build the trust and confidence necessary for an effective partnership.

Also discussed was the rise in the cost of living. The PSC reiterated that while it recognized the impact that global factors were having on prices here and in the region the government should use the surplus VAT revenue to reform the tax system. The government’s VAT take was $7.7B higher at mid-year than projected and this has led to calls for the 16% VAT rate to be lowered. In its mid-year report, the government raised its projection for the VAT take from $24.8B to $30.5B. Critics have argued that the government had said that VAT would be revenue neutral but that it was now harvesting far more than projected.

The PSC also called for stepped up efforts in the monitoring of and ensuring of compliance with the VAT and Excise tax systems. It also called for greater emphasis on the curbing of smuggling especially along the country’s borders.

According to the PSC, the Minister of Finance agreed that the PSC’s recommendations offered a “good basis for technical analysis and continued dialogue”. Singh also emphasized government’s commitment to the reform of the tax system and said that detailed studies on this are soon to be launched under the National Competitiveness Strategy.