Government used its majority on Friday evening to pass the Tax (Amendment) Bill 2016 and Travel Voucher Tax (Amendment) Bill 2016 saying that they will ensure hassle-free travel and other benefits even as a disgruntled PPP/C argued strongly against it.
Finance Minister Winston Jordan, despite the heavy punches from the other side of the House, stood his ground and urged all to support the two Bills in the interest of the travelling public.
PPP/C MP Gillian Burton-Persaud described the Tax (Amendment) Bill 2016 – the first of the Bills to be dealt with – as “unimpressive… unnecessary and burdensome” particularly since it will benefit only the “big fishes” and leave out the “small man”.
This Bill which can be viewed in full in the Official Gazette gives power to the Commissioner General of the Guyana Revenue Authority (GRA) to appoint collection agents for the collection of travel tax and for the remission of this said tax to the Commissioner. According to the explanatory memorandum, a carrier or a collection agent who fails to remit the travel tax to the Commissioner or a carrier who fails to remit the tax to an agent or the Commissioner shall be liable to the prescribed penalty.
Jordan said that the arrangement at the Eugene F Correia International Airport, Ogle was different as a traveller heading to an external destination was only required to pay $2,500 compared with $4,000 at Cheddi Jagan International Airport, Timehri.
He said the Ogle airport traveller was not required to pay the security fee. “I don’t know how much longer that will be because security is a major issue at every airport [and] of course it is expensive. I don’t how long we can be that generous,” he said.
The minister told the House that joining a line to pay the tax could be “a pain” at peak season. “We seem to be slow sometimes in making changes even as we watch our neighbours in Caricom making changes and I might be correct in saying that we are perhaps the last, at least Caricom, where you have a scenario where you have to pay departure tax at a booth. Other countries… have gone past this already,” he said.
According to Jordan, the complaint would be that persons when travelling from Barbados or Trinidad and Tobago do not have to pay tax but it was required in Guyana. He said the issue was not paying the tax but having to go to a booth to do so.
“We intend to change that,” he said adding that this will be done either by the airline or through a collection agent. “My understanding is that the commissioner is already in discussion with both airlines and a collection agent with a view of having this tax collected,” he said explaining that the tax would be included in airline tickets at the time of purchase and remitted to the GRA as agreed. He stressed that one of the advantages of this bill is that it will eliminate one of the four lines passengers have to join when travelling abroad.
He informed that the International Air Transport Agency has been identified as the agency which will be collecting this airport tax, and was said to be reputable. It is being used by almost all of the countries that have decided to have the tax incorporated in the ticket.
Jordan stressed that this new arrangement will result in an improvement in travellers’ experience, since they will no longer be burdened with joining a line to pay the travel tax and would see a reduction in the cost and administration burden of the GRA; Guyana will utilize a collection arrangement consistent with international practices.
Enhance tax administration
He said that to collect the tax, the company will be charging a commission equivalent to 1.5% which is roughly $10.9 million using 2016 figures. He described this as “quite a controllable saving.”
“Of course we are not saying that everything…is rosy and so on. There are risks involved in this,” he stressed. He said that Guyana had initiated a similar arrangement years ago but the experience was not a “stellar” one. “The long and short of it was that they [the then Inland Revenue Department] had to discontinue that arrangement and go back to the arrangement at we have currently,” he said.
“I think from that standpoint we can feel more confident than we were in the past when we attempted to go this route,” he said. He explained that this arrangement does not absolve GRA from putting in “strict debt collection, debt enforcement arrangements to ensure that the money is transferred on time and in the amounts that were collected. And of course, part of this arrangement must include heavy fines and penalties for not remitting the monies both on time and in the amounts that were collected.”
Jordan said that there have been discussions with the airlines already and they have been given ample notice of this impending change and the response was that they were willing and ready to carry out this additional responsibility when given the go ahead.
“This is a win for the populace in terms of a benefit going to them… And it is a win for us as a government and as a collection agency in that we would enhance tax administration and the release of human resources in context with our tax reform efforts to look at more high risk areas of tax collection,” he said.
However, Burton-Persaud saw things differently and made it clear that it was not a piece of legislation she could support.
She said that after listening to everything that was said by the minister, she wanted to know what would happen when tickets were purchased by international organizations for persons in living in Guyana to attend seminars and workshops. “Will they be paying that increase on that ticket or is it left for you in Guyana to pay that travel tax? …Because what I am aware of, is when these agencies purchase tickets for you, you still have to go to the line …and pay your departure tax,” she said.
She questioned whether persons will be now informed by the travel agents that the tax was included in the ticket. She questioned what would happen when persons are going abroad for medical purposes.
She said that too much attention was being paid to money and not on the implications this will have on the travelling public.
PPP/C Chief Whip Gail Teixeira was also critical of the Bill. She said that both Bills and the Travel Amendment Regulations, which was scheduled to come up later in the session, were all interconnected. Noting that the two Bills were basically saying the same thing, she claimed that the travel departure tax that government seems to be referring to does not exist. “What you have is a travel voucher tax, which is covered in the Travel Voucher Act,” she stressed while explaining that the fee was changed in 1987.
“This is a piecemeal… hurry put together, not thinking about things thing,” she said, adding that she completely agreed with her colleague and could not support the legislation brought before the House.
Soon after this Bill was passed the Travel Voucher Tax (Amendment) Bill 2016 was up for consideration.
Jordan explained that the amendment being sought will confer on the Commissioner General the power to appoint collection agents for the collect of this tax.
The Explanatory Memorandum also stated that certain persons including persons 65 years and over, children under seven years, diplomats and flight crew were exempted from paying the tax.
The Bill also provides for the remission of the collected sums to the Commissioner and a penalty for failure of a collection agent to remit the tax within the time determined.
“Essentially this will remove the need for some airlines to directly remit the travel voucher tax to the Guyana Revenue Authority,” Jordan said, while explaining that this was being done now because of difficulties GRA had with regard to a certain airline that has collected over $100 million in travel voucher tax which has not yet been handed over.
He said the haste to get this done, would be to remove the requirement that all airlines must collect it. “This would give the Commissioner the room to determine which airline he will trust with collecting this money and which airline he will make other arrangement with to make sure that the money goes directly to the Revenue Authority,” he said. Despite prompting from the opposition he declined to name the airline. “We all know the man. We all know the airline, so I don’t need to say the airline’s name,” he said.
Jordan said the GRA was seeking to have both the travel tax and the travel voucher tax collected and paid over by the same collection agent identified for the collection of travel tax.
Jordan said the Bill will ease the need for compliance by the airlines and simplify the administration of the tax by the GRA, while ensuring consistency with international practices in the air transport industry. It will also see the improved and modernized way of doing business and tax administration while assisting the GRA in enforcing the laws.
Again Burton-Persaud gave her thumbs down. Earlier, while speaking about the Tax (Amendment) Bill she expressed disagreement with the classes of persons who would benefit from not paying this tax. She questioned why the President along with his/her family was not included on the list. She also expressed disagreement with the age limit for a child and said that this could disrupt the frequency with which families travel.
She told that House that the Bill was partial. She said that as she understood it, this tax was the percentage that a traveller paid on his or her ticket. Government, when in opposition, after cutting allocations to the air transport sector, she recalled, demanded that there be no increase of the Travel Voucher Tax. “They stated at the time that that would increase the cost of the airline ticket. Today, [they have]… put on an increase. Would it not affect the cost of the ticket?” she questioned.
“Once again we are digging into the pockets of the ordinary man,” she stressed.
Teixeira stressed that the Tax (Amendment) Bill defined the travel tax as the travel voucher tax and she was unsure what they were now attempting to pass.
PPP/C MP Adrian Anamayah also contributed to the debate.