The National Assembly has assented to an affirmation order meant to initialize the VAT Tax (Amendment) Regulations of 2016, which will bring such changes on stream as the payment of VAT on water and electricity.
Moving the motion, on Saturday morning last, Minister of Finance Winston Jordan told the House that the order will amend Regulations 2, 3, 8, 13 and 14 of the VAT Act.
Regulation 2 which establishes the VAT rate at 16% is amended to read 14% and Regulation 3 raises the earning threshold for those required to submit VAT returns from $10 million to $15 million. Additionally, the new Regulation 13 zero-rates electricity provided that the consumption does not exceed $10,000 per month and Regulation 14 has been amended to zero rate water provided that the consumption does not exceed $1,500 per month.
Three members of the opposition chose to address the order, stating that while they agreed with the rate reduction and the threshold increase they could not support the implementation of a tax on the consumption of electricity and water.
Both Frank Anthony and Pauline Sukhai told the House that the 2017 Budget projects an increase in VAT earnings of $9.2 billion over 2016. In 2016, $36 billion were earned from VAT, while $45.3 billion is projected to be earned in 2017.
“This increase is not because of efficiency but because much more has been brought into the tax net. [It is] a burden for our citizens we cannot support,” Anthony argued.
In response, Jordan stressed that the VAT contribution to revenue, since its implementation, had severely fallen and this measure, along with several others contained in the 2017 Budget would address that.
“In 2008, VAT was 34% of total revenue intake. In 2016 it had gone down to 24%.
The collections have fallen off because of the weakening of the VAT base, because of exemptions and weak enforcement. We aim to remedy this,” he explained.
Anthony’s argument was taken further by Opposition Chief Whip Gail Teixeira who proposed an amendment to the order. She offered the opposition’s support to a form of the order which does not include a tax on electricity and water.
According to Teixeira her party was prepared to support policies which will improve quality of life and oppose those which will be detrimental.
As such the amendment which was proposed “in good faith” would allow the House to reach a consensus on issues both sides feel strongly about.
“The government will have a reduction of the VAT, a measure they have long campaigned for and we will see the removal of VAT on electricity and water. We are asking for the affirmative motion to be amended… delete[ing] Regulations 13 and 14,” she said.
The motion to amend, which was seconded by MP Juan Edghill, was rejected by the government side of the House which assented to the order.