The case for VAT on education is weak to non-existent

Dear Editor,

The decision by Dr Rupert Roopnaraine, Minister of Education, to meet five parents and Swami Aksharananda, educator, as representatives of the group protesting outside of his ministry against VAT on education services on April 5 was commendable. Coming on top of the Cabinet decision to hold a consultation with the public at the National Cultural Centre today Friday, April 7 at 11 am, there is some hope that the government is finally ready to reverse the decision to impose VAT on education.

Why it has taken the government over four months to do the right thing is baffling. Almost every argument by the government has been met with cogent, rational and compelling responses. Here are some of those arguments and the responses.

Argument 1: Only seven of some sixty private schools were tax compliant, a vague term at best.

Response: If that is so, then go after the non-compliant school owners and operators, not the parents and by extension their children. Moreover, the government might well find that many of those schools do not earn in excess of $15 million per year and are consequently exempt from paying VAT.

Argument 2: If parents can afford to send their children to private schools, they can afford to pay 14% VAT.

Response: Estimates of the profile of the parents sending their children to private schools as a whole, show that around 70% of the parents come from a combination of working class and lower middle class families and single parents making untold sacrifices. For many in that 70%, including some of the signatories to this letter, the 14% VAT might well make the cost unaffordable, and force the withdrawal of the child from such schools or reduce what is placed in their lunch kits. Is that what the government wants?

Argument 3: Parents have a choice.

Response: Have the policymakers spent any time analysing the performance of the private schools versus the public schools, or whether the public school system can absorb the several thousand current private school students? In terms of post-secondary education, what choice do students of the University of Guyana have? Does the public education system provide the necessary training for some of the skills which our economy demands, such as business courses and the training of pilots?

Argument 4: The private schools can absorb the VAT of 14%.

Response: This means that the schools are being asked to reduce their gross revenue by 12.28%. Almost without exception, any of Guyana’s most successful and high profile businesses having a reduction of gross revenue by 12.28%, would  pay less VAT, make a huge loss and therefore pay no Corporation Tax, be forced to lay off workers and be unable to finance capital expenditure.

Argument 5: Where will the $350 million come from, the government asks?

Response: People with the relevant expertise have answered this.  Here are a few of their proposals:

  1. Implement even partially, the recommendation made by the Tax Reform Committee (TRC) for an increase in the Excise Tax on tobacco and alcohol; this would more than treble the VAT the government says it would lose if it reverses the decision to charge VAT on education services. Incidentally, the Minister of Finance of Jamaica took the almost identical step in that country’s 2017-18 Budget announced last month.
  2. Make savings to, and/or cut recurrent expenditure by $1 out of every $500 dollars in the 2017 Budget.
  3. Save or cut 0.6 cents (less than one cent!) out of every dollar of the 2017 capital budget. The government consistently repeats that leakages in the capital budget amount to somewhere between 15 % and 20%, so 0.6% should be very easy.
  4. Increase the collection of non-VAT revenues by a mere $1 out of every $300 the GRA is budgeted to collect in 2017.
  5. Make an additional transfer to the government of 1.5% of the cash GGMC, GPL and Guyoil and other governmental bodies are holding, estimated at about $30 billion.

The case for VAT on education is weak to non-existent, counter-productive and illogical. Dr Roopnaraine, an educator himself, has a historic duty to see that the VAT on education is removed forthwith as the VAT was removed from health services after being imposed by the 2017 Budget.  Our sincere and fervent appeal is for the government to remove the VAT forthwith and if necessary, apply any of the five measures suggested.

Yours faithfully, 

Andaiye, Former Educator and Women’s Rights Activist

Melissa Ifill, Parent and Educator

Euborne Innis, Parent and Vendor

Odessa Washington, Parent and Itinerant Vendor

Troy Thomas, Parent and TIGI President

Kidackie Amsterdam, Parent and Educator

Deon Abrams, Parent and Educator

Nicola Marcus, Parent and Women Rights Activist

Thomas Singh, Parent and Educator

Christopher Ram, Accountant and Public Commentator.  

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