Government back-bencher, Odinga Lumumba has sought to justify keeping the Value Added Tax (VAT) at 16 percent, saying it is a vital source of revenue that has helped provide tax-breaks and increase in old age pension, among other benefits in this year’s proposed $208.8B budget.
“If VAT were to be lowered, the 15% old age pension could not have been increased… the money has to come from somewhere… because of the 16% VAT the sugar industry was able to receive $1B and $2B was given to the Linden electricity sector,” Lumumba said last Thursday, during his contribution to the budget debate.
The opposition has been seeking to have the VAT lowered, with the AFC proposing that it be reduced to 14%, while APNU has listed a series of items, especially every-day food items such as the breakfast drink Milo, which it says should be taken off of the VAT list.
“GPL was given $5.8B. If VAT was lowered, we would not have been able to cushion the 1% increase in the NIS. It is because VAT is 16% that the income tax threshold is eased… we could not have provided $20,000 per annum to senior citizens in electricity,” Lumumba added.
He also gave an anecdote of two persons who would have departed Guyana some 20 years and upon returning were awestruck at the developments of his government, including the National Stadium, the four-way East Bank Demerara Road and housing schemes. Against this background, he charged the opposition to support the budget.