Maintains that 16% due to computation error
Chartered Accountant Christopher Ram is calling on the Government to reduce the rate of the Value Added Tax (VAT) from 16% to 12%, arguing that the current rate was higher than it should have been because of a computation error.
Stabroek News was unable to get a comment from Minister of Finance, Dr. Ashni Singh on Ram’s contentions despite several calls to his office.
In a statement yesterday, Ram said that following the launch of the VAT in 2007, a “very senior political functionary” had confided to him that “the government had discovered a significant error in the computation of the rate of the VAT resulting in the rate being higher than it should be”. Ram declared that he was told that if he sought to divulge that information, it would be denied.
“Recent events and statements by public officials, letters in the press and the increasing evidence of the effect on poor people of the ever-increasing spiraling rise in prices while the government seeks to gain political mileage from their ‘initiatives to help the poor’, cause me to regret that I had not addressed this matter earlier”, Ram asserted.
He said that he had decided that he would wait on this year’s budget to see how the collection of VAT and the Excise Tax compared with the amounts budgeted in 2007 since the government has committed publicly to a revenue-neutral regime of VAT and excise taxes. He noted that the increase was 76% over budget for VAT and 20.9% for the Excise Tax, giving an overall increase of 47.8%.
His statement said that shortly after the budget was presented, he wrote his source, reminding him about the conversation about the rate and offered the view that while part of the increase was attributable to the 4.7% growth in the economy and a 14% increase in imports over budget “a significant portion of the excess was attributable to the VAT rate initially being set too high”.
Ram, the Sunday Stabroek business page columnist, said that in the letter, he recommended a reduction of the rate to 12% but while the letter was acknowledged, the contents were not addressed with him.
He noted that he had publicly posed two questions to the Minister of Finance recently on the issue as he was concerned about statements coming out of that ministry and the Office of the President “which could not accurately affect their knowledge and which served to mislead the nation”.
He declared that his information about the incorrect computation of the VAT rate was confirmed recently by another senior political functionary and “I would find it hard to believe that the Minister of Finance was not equally informed”.
Ram added that he hoped that the Government would “act honourably by correcting its mistake and reduce the rate at which VAT has been wrongly imposed for more than 18 months”.
In real dollars the people work for peanuts.
Therefore, Ram is correct that the VAT should be reduced to 12%.
Coupled with GPL and GWI most people are in dire straights.
People have to cut out many essentials, perhaps even skipping a nourishing meal to make finances stretch for the month.
This regime implemented the VAT without any foresight and thought for the poor working class. Very typical of this visionless regime.
why don’t they make everything 5 % and ease the headache, make the zero-rated items 5 %, make the 16 % items 5 % you win some; lose some. it works like this, if a store sold $1000000 worth of goods a day, then that store will pay $ 50000 to gra, that way ppl wouldn’t know they are paying vat, because you wouldn’t need to put the price for vat on the items, it’s vat in disguise.
YOU SHOULD BE A CHARTERED ACCOUNTANT………..IN THE PRESENT DAY WORLD, EVERYTHING GOES UP, EXECPT WAGES……EVEN IN THE BIG APPLE, LONDON,CANADA ETC.THINGS ARE GETTING FROM BAD TO WORSE…..THERE IS A GLOBAL CRISIS DONT YOU KNOW THAT?
A lot of people see only as far as their noses. Here is a prominent businessman now lamenting the VAT curse pronounced on guyanese, like if they had absolutely no idea that this thing was in the making. Like if he didn’t support it in the first place. Like if he wasn’t wooed as many others to promote it. Now they see their world falling apart, their profits and lifestyle threatened. But how many poor people were not made poorer because of this VAT. Money supposedly back by gold, unless printed out of thin air, simply changes hands from the poor to the rich. The poorer the public gets the richer their lawmaker gets. If laws are passed without much public input or full awareness they can be ‘unpassed’ if we protest indignantly loud enough.
this is just unbelieveable….how can they not see such a significant mistake? i do hope that the people in Guyana realise that they have been greatly disappointed by the Government. Mr. Ram is absolutely right, 16% is way too much. 12% VAT is moderately ok, although it’s still alot if one was to compare the tax paid by consumers in Guyana to the tax paid by consumers of another country.
MIstake or not, I dont know if the VAT should be reduced to the amount that Mr Ram is suggesting. Indeed the world is in a crisis, all because of the fuel cost which affects everything. Transportation and manufacturing are affected. Think about it, a barrel of oil was 30 usd in 2000 and 8 yrs later its about 148 usd per barrel, that is about a 500% increase.
Ram is probably public enemy numero uno by now. The Government collects too much via taxes (including VAT and Income Tax) and therefore needs to reduce the tax burden on the people. I am tired of hearing that they spend it on programmes for the benefit of Guyanese – i just think they waste it.
This Government is not at all concerned about the poorer class of people in this country. Everything is going up (and we understand globally) because of oil prices, the bus fares, gasolene, car parts, food stuff, speed boat, and ridiculously the DHB toll from $50 to $100. an increase of 100%, this is terrible, then VAT of 16%, and no increase of wages and salary, where will we get the money for all this increase? Children to educate, bills to pay etc. what is really going on, this is enough to send one crazy in this country. That’s part of the reason for increased crime rate, the crisis is pushing people to the limit, people will continue to steal and kill because of desperation.
Yet a lot of the PPP mouthpieces said it was not VAT that resulted in the high cost of living.