VAT changes passed after fierce debate over garnishing, travel restriction

While the Government has argued that the amendments to the Value Added Tax (Amendment) Act are to assist the “overwhelmed” Guyana Revenue Authority (GRA) to close the loopholes and catch tax cheats, the opposition yesterday accused it of being dictatorial and turning the country into a totalitarian state.

Finance Minister Winston Jordan held up the amendments – part of the slew of changes that will be made to various acts to effect the measures presented in the 2017 budget – as one of the “strengthening measures” to be given to the Commissioner General of the GRA but the two speakers on the opposition side said that some of the amendments interfere with the rights guaranteed to citizens under the constitution.

PPP/C MPs Priya Manickchand and Anil Nandlall, the two speakers to oppose the amendments, were concerned with the changes to give the Commissioner General the right to prevent persons through the Chief Immigration Officer from leaving the country once they owe VAT and also where he can recoup monies from persons through their bank accounts.

Priya Manickchand
Anil Nandlall

The two were vociferous in their presentations which at times also seemed to incense their colleagues on the other side and Speaker Dr. Barton Scotland was forced to use his gavel repeatedly. At the commencement of her presentation, Manickchand also stirred up the atmosphere when in congratulating the nine recently appointed Senior Counsel (SC) she said she would have liked to congratulate Minister of Public Security Khemraj Ramjattan – a man’s whose performance as a minister she questions but who she knows to be an excellent lawyer. She said she had also wished to congratulate Public Telecommu-nications Minister Cathy Hughes’ husband, Nigel Hughes on his appointment as well. Many have questioned why Hughes was not among those appointed as SC.

While they argued that the amendments should not be made, the opposition did not vote against the Bill but abstained and it was passed in the National Assembly with the support of the Government members of parliament.

According to the Bill’s explanatory memorandum, it seeks to amend the Value Added Tax (Amendment) Act, Chapter 81:05. Importantly, it increases the statute of limitation period under the Act from three years to five years and increases the penalties for offences that fall under it.

Jordan pointed out that presently under the Act the statute of limitation is three years but with the amendment it would be increased to five which would assist the GRA in ensuring that those who owe VAT pay up. He noted that the revenue authority’s lack of resources have lent to some abuse of the process by business people.

“The measure is an attempt to plug the loophole…” he said and to strengthen GRA’s capabilities of ensuring those who owe pay.

With the new amendment the GRA would have five years to conduct reviews of compliance and to carry out audits. Another amendment to the Act had to do with the repealing of the section that gave the commissioner the authority to extend the time within which persons can file for a rebate. This process, the Minister said, proved to be burdensome to the authority because of the amount of time it took to process those claims and also just about 25 persons a year have been using the system for small amounts.

As to the ‘garnishment’ amendment which empowers the Commissioner General to access a bank account, trust company, credit union or other financial institution ac-counts by writing to those institutions, the Minister pointed out that it clearly states that this would be done after judgment is granted against a taxpayer and in favour of the revenue authority.

 

‘Petty and vindictive’

However, Manickchand in arguing against the amendments said that they are even more frightening since according to her the administration has proven to be “petty and vindictive.”

Still against the recently passed budget, the former education minister questioned whether any of the government ministers could say that in meetings with their supporters those persons did not express worry about the measures announced.

Saying that she cautiously supported some of the amendments to the bill – such as the repealing of the extension of the rebate process which she would have suspended instead- she said she has great concerns for the others such as the one that will allow the authority to access the accounts of taxpayers.

While admitting that this could only be done after a court judgment, the parliamentarian said that usually when rulings in civil matters are made there is a process that is followed instead of the authority immediately recouping the monies owed by accessing such accounts.

Manickchand also flayed an amendment to the Act which she said means the GRA can stop persons who owe tax from leaving the country without a court order. She said this is very scary in light of the fact that under this government there have been cases of people’s homes being searched at 5am in the morning and an army officer, his wife  and another man losing their lives in an accident while the army officer was trailing two citizens. She questioned why the authority cannot go to the courts and seek such an order instead of the commissioner general being afforded such powers.

“Every person should be allowed to travel unless a court order is granted,” she pointed out, while adding that she also has concerns with the amendment that increases the penalty that defaulters have to pay.

The government, according to her wants “to tax and over tax every citizen and call that growth come next year.”

‘Devastating’

For his part Nandlall argued that the amendment that deals with persons leaving the country will have “devastating consequences” for citizens and he emphaised that this is not in keeping with the constitution which gives every person the right to leave the country freely unless so prevented by a court of law.

“We are sliding into a totalitarian state,” he said and recalled that persons, including Education Minister Dr. Rupert Roopnaraine, under the PNC Government were prevented from leaving the country and he was forced to move to the court which ruled in his favour. As he called out the names of others who also suffered a similar fate the Speaker asked him if that was necessary since the persons were not present and there was thunderous approval by his colleagues. Nandlall also pointed out that the cases he raised were matters of public records.

Thousands of Guyanese, he said, would be exposed to the whims and fancy of the commissioner general.

“You pay up?” newly minted Social Protection Minister, Amna Ally then asked before adding “You can’t go nowhere” as a member of the opposition shouted dictatorship.

And as to Jordan’s argument that the Commissioner General already had access to persons’ bank accounts under the Income Tax Act, Nandlall said that the Act deals with the final assessment and for him there is a difference between that Act and the VAT Act as persons would always owe VAT since businesses continuously collect this tax for the revenue authority.

And the process of accessing the monies is be expedited at the expense of citizens without due process which he deemed as “slaughtering the rights of the Guyanese people…That is why you are cancelling leases [a reference to the cancellation by the government of the controversial Red House lease] and invading offices,” he said.

“Absolute rubbish” was Public Security Minister Ramjattan’s riposte to the comments made by Nandlall.

‘Tax cheats’

In rebuttal to the arguments made by the opposition, Minister Jordan pointed out that the mentioned amendments are not targeting persons whose taxes are up to date but rather “crooks” who are most times the rich and it is the ordinary persons who are forced to pay more.

The amendments, he said, are to strengthen the office of the Commissioner General to ensure those that owe pay adding that “we are not going after the ordinary and model citizens we are targeting those who are cheating.”

Further, the minister pointed out that VAT is monies collected on behalf of the government and should be paid over immediately and not be used as cash flow for businesses as is done with monies sometimes deducted for the National Insurance Scheme and not paid.

“It is a travesty in this House for people to be defending tax dodgers and tax cheats,” he said.

This year’s budget also made provision for the lowering of the VAT rate from 16% to 14% and  its application to water and electricity bills over a certain figure.

 Capital Gains Tax

Also passed last evening were amendments made to the Capital Gains Tax (Amendment) Act which amends Section 2 of the Act by substituting for the relevant market value as at 1st January 1991, the market value as at 1st January 2011, as in the Property Tax Act, Cap.80:01.

Jordan said that amendment will see money being put into people’s pocket instead of picking the pocket. And while opposition members Neendkumar and Adrian Anamayah said they find the amendment suspicious, Jordan said that there is no hidden agenda.

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