Dear Editor,
Who were the team of persons involved in the drafting of the VAT Act? Did they use persons who are currently involved in the retail sector? Were suggestions made by the business sector incorporated in the Act? I am asking these important questions as throughout the years I have learnt that education is important in every aspect of life. Importantly also we have more cooperation from people when we involve them in the decision making process.
At the moment the VAT implementation is faced with so much negativity that we can see this leading to a serious negative economic situation for the year 2007. At the moment the VAT Act allows for persons who declare less than $10,000,000.00 a year in sales to be exempt from charging and receiving VAT. If we have a situation where there is a run on businesses that are registered to collect and remit VAT to GRA by the consumers it will mean serious trouble for registered businesses and also a significant decline in revenue to the Government of Guyana.
In retrospect the introduction of VAT as of 1st January 2007 is a strange one. I remember making a suggestion at one of the GRA VAT/GCCI meetings that they should have considered a date in March 2007. The retail trade normally sees increased business in the following periods. June – September – School seasons and November – December – Christmas season. Implementing VAT just after the Christmas season caused significant stress on businesses. After working longer hours in the December month persons were challenged to make their stores VAT ready as of 1st January 2007. In the first week of a new trade year businesses need time to analyze the last trade period, stock on hand and to start planning procurement and marketing strategy for the next quarter. I wonder how stores that are not computerized are finding this changeover. Most retail stores carry a mix of inventory over 2000 varying items, each of these items will number a minimum of 24 units so we are looking at 48,000 units of items that need to have a change of prices if they are making the items VAT inclusive prices, or if they are tagging these items off in their computers to calculate 16% VAT. At this time the employees and management are all suffering from tiredness due to the hectic season they are emerging from.
I cannot understand why businesses would need to increase their prices on old stock. Apart from VAT there is no need for this increase and if businesses are doing so they are doing something wrong. If the increase is reflected due to having VAT inclusive prices on the items that should mean when the customers go to the cashier they should just pay that price and no further 16% as the 16% is already included in the price. The 16% received by the seller should be deducted and remitted to GRA/VAT department.
Persons who are charging VAT to customers when they are not registered to do so are blatantly doing something wrong and these persons should be reported immediately to the GRA/VAT team.
We had the GRA/VAT team embarking on an advertising blitz in the month of December. Their message was competing for the viewers/listeners’ attention with the sales advertisements from the business community. Persons tend to tune out information when it is too much. In putting out the information it seems like the public seem to have felt that the prices on commodities would have dropped immediately as of 1st January 2007. Could this have caused a decline in the projected sales of December 2006 due to the perception by the consumers that prices would drop as of 1st January 2007? After experiencing a sluggish sales period due to an election year 2006, businesses only increased on stocking in the last quarter to ensure that they could meet their sales target and cover their year’s overhead expenditure. Did the public awareness campaign done by the GRA/VAT Team lead to the reduction of such sales and is that why stock on hand is at its highest now? Importantly when we launch a campaign to educate the masses we need to ensure that the information coming is clear and not ambiguous and that we maintain clarity in our statements.
Yours faithfully,
Karen Bacchus
