Two months into the introduction of Value Added Tax (VAT), low income earners including civil servants who constitute the bulk of the country’s consuming public are still reeling from the steep increases in the cost-of-living sparked by the tax system.
Assurances from the government that the system would have resulted in the lowering of the cost-of-living through the zero-rating of several essential consumer items have been negated by the harsh realities in the market place. While in a few cases the prices of some zero-rated items have remained stable, increases in a wide range of items are evident across Region Six (East Berbice/Corentyne).
A number of unscrupulous businesspersons while not charging VAT on zero-rated items have increased their prices. The prices of items which attract VAT have also been jacked-up by some businesses, presumably representing their mark-up. Reports of some businesses not issuing computer-programmed receipts indicating the imposition of VAT; some issuing handwritten receipts; others not issuing any receipts but charging more than the legislated 16 percent tax, continue to surface in the region.
The increases have resulted in a sharp decline in sales for numerous businesses as consumers find it more and more difficult to make ends meet.
Stabroek News recently spoke with a cross-section of consumers who all related the same story. One was a private sector employee who works for $35,000 a month, is married with three children, all at school, and living in rented quarters.
“I pay approximately $7,000 in utility bills [telephone and electricity] and $15,000 rent. This leaves me and my family with $13,000 to eke out a living for the rest of the month. I am broke by the time we buy a few essential items like rice, flour, sugar and some meat. I am unable to give my children any pocket money and they are forced to take rice to school every day,” he told this writer.
A female single parent with four children who is employed as a security guard and earns just under $30,000 said since the introduction of VAT she and her children have been suffering tremendously. “I used to spend $10,000 in the store and have enough goods to last at least one week – now that same money barely lasts a few days.”
Similar stories were repeated by almost everyone this newspaper spoke with. Most said they rarely visit the supermarkets because they simply do not have the spending power to do so. The increases they say have placed unbearable burdens on them and their families.
On the other side of the coin not many businesspersons have anything to complain about except some difficulties in filling their VAT return forms. Some ended up filing their returns late while others had to seek professional help to fill their forms. A few though have been complaining about the decrease in sales.
According to one businessman who says he has been toeing the line “businesspersons would not have much to complain about – remember this is a consumer tax, so all the businessman has to do is to pass on the tax to the consumer. Unfortunately several of my business colleagues are not very honest and care very little about the consumer.”
Significantly, no one, including consumers and business persons, wanted their names mentioned in this article while airing their views and concerns. Many said they were fearful of reprisals and/or victimization.
“The failure of the Guyana Revenue Authority to effectively monitor the system has left consumers open to exploitation on a wide scale with no form of recourse or redress,” said one senior public servant. “When you compute the 16 percent VAT and the mark-ups charged by the importer, the wholesaler and the retailer which are all passed on to the poor consumers you would realize how difficult it has become for them to survive,” he said.
Some observers are of the view that with rising unemployment among young people, the rising cost of living and increasing levels of drug use, abuse and trafficking, poverty, crime and other social ills would definitely increase.
