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”.
