Just how gullible the government thinks Guyanese are was revealed on Tuesday in the news that the Cabinet had decided that the Value-Added Tax (VAT) would remain applicable to private school tuition fees, but would be reviewed in the preparation for next year’s budget. It should be noted that Minister of Education Dr Rupert Roopnaraine, who made the announcement, said “reviewed” and not removed.
There had been a tumult against the budget measure, which took effect on February 1, including a petition signed by over 14,000 people, protests involving private school stakeholders and students and a consultation at the National Cultural Centre (NCC) during which those affected poured out their hearts to the government functionaries present.
At that consultation, Minister of Public Telecommunications Cathy Hughes was placatory, telling impassioned and incensed parents and private education officials that their concerns were being heard, were being taken seriously and were likely to inspire positive action at the next Cabinet meeting. Was Minister Hughes just telling the people what she thought they wanted to hear? Or did she genuinely believe that government would forego what is clearly an easy revenue stream?
On the other hand, Education Minister Dr Rupert Roopnaraine, who had previously said that Cabinet would consider the concerns of persons protesting against the placement of VAT on private tuition fees, chose that forum to rap private schools that have not been paying their fair share of taxes. Opening the consultation, he informed the gathering that many private schools were charging between $144,000 and $300,000 per academic year and that the top eight earners raked in more than $2 billion a year in tuition fees. This, he claimed, showed their ability to absorb the tax without passing it on to students and parents. He then added that some of them were not paying their fair share of taxes as they were either inflating expenditure or under-declaring their income.
If what Minister Roopnaraine says is true isn’t that tantamount to tax fraud? There must be some evidence to support what he said if it was not pulled out of a hat. And if there is, why isn’t the Guyana Revenue Authority pursuing these tax cheats and making them pay their fair share?
But there are other questions that have to be asked as well. One wonders whether the government, in computing private-school earnings, took cognisance of the cost of running one of these institutions. It is a fact that unlike public schools, private schools are well maintained. None of the mainstream private schools operate from ramshackle buildings that are likely to cause injury to parents and teachers. Washrooms are kept operable and clean year round, as are play areas. Laboratories are equipped with the necessary tools and materials. The Ministry of Education, which has to maintain the public schools, might be in a position to state the various costs to upkeep a single school at the nursery, primary and secondary levels. These schools should also be paying for electricity and water on a monthly basis and those which own their properties should also be paying annual rates. If they are not, then those in authority at all of these agencies need their heads examined. But if they are, can they still be fairly accused of “raking in” billions?
Then there was Prime Minister Moses Nagamootoo, who told the private education stakeholders what turned out to be the hard truth: “The 14% VAT will be reviewed. I say this: the 14% tax will be reviewed, as well as other taxes but whether it can be reviewed for 2017, I cannot say that definitively. I can say that 2018 is a possibility, so I can take your recommendation to Cabinet and hope that Cabinet can pronounce on your representation and that a decision should be announced soon.”
As it turned out, the Prime Minister was the one who seemed to best know the government’s position on the issue. That position had previously been articulated by Minister of Finance Winston Jordan in a letter to this newspaper published on February 19, in which he stated that government had already removed a long list of educational materials from zero-rated VAT, to being VAT exempt. He also wrote: “VAT is to be charged on the tuition fees paid to any private educational institution. As of 2016, there were 54 such institutions registered with the Guyana Revenue Authority, few of whom were tax compliant, including submission of yearly income and corporate tax returns.
“The imposition of the VAT on tuition fees falls on the payer (parent) rather than the payee (educational institution). The argument has been made… that some parents would not be able to afford it. Perhaps, this argument has some merit. But, is the solution the complete removal of the VAT or to find creative ways to overcome it? One such solution is the absorption of the 14% VAT as was done by GTT.”
Bolstering what Minister Jordan said, President David Granger had stated on March 1, “…There are very strong arguments to maintain the tax. I said Cabinet examined it and I will urge the Minister of Finance to make a public statement so that the issues are better understood.” He had also said, “As it is now, the tax stays and as I said earlier there are grounds for ensuring that there is better compliance by all private operators with the GRA’s regulations. Right now we have a high level of non-compliance by some private entities.” He had further stated that while the government was not looking to put pressure on private entities, there was need to ensure that “all Guyanese pay their fair share”.
It is pellucid that the government had made its decision since then and was sticking to it. The meaningless consultation held at the NCC therefore, was its way of paying lip service to an issue that is deeply felt by a cross section of citizens, who seem to have no constituent value. It was condescending, time wasting and, much like the three-month suspension of the parking meter system, an obvious ploy to get the protestors off the streets. Has it worked? Time will tell.