The government is really dealing with the NIMBY syndrome

Dear Editor,
The debate over VAT on private education is one of the great ironies of our time. I find that the debate has exposed our inability to reason as a society, one of the fundamental benefits of a good education. But worse still, it exposes how propaganda can gain traction and lazy instinct replace the duty to engage in independent and objective thinking and analysis, even by the intelligentsia.

One can see how dangerous this is when we consult Wikipedia’s definition of the intelligentsia “The intelligentsia …is a status class of educated people engaged in the complex mental labours that critique, guide, and lead in shaping the culture and politics of their society. As a status class, the intelligentsia includes artists, teachers, and academics, writers, journalists, and the literary hommes de lettres. Historically, the political role of the intelligentsia (the production of culture and ideology) varies between being either a progressive influence or a regressive influence upon the development of their societies.”

Take the claim that the status of education as a human right exempts it from taxation. The ease with which this fallacy can be exposed alone makes my point. The UN Declaration of Human Rights is available with a few mouse clicks. On reading it, it becomes readily apparent that while education is a human right, so are food and shelter. The consumer pays for both of the latter and depending on the nature of the food and the level of shelter each is taxed and so are the businesses that provide them. There is nothing in the classification of a thing as a human right that inherently requires it to be exempt from taxation when it is bought and sold. Again Article 13 provides that:

(1) Everyone has the right to freedom of movement and residence within the borders of each state.

(2) Everyone has the right to leave any country, including his own, and to return to his country.

We know that we pay heavily to move between countries and it is taxed accordingly.

I see persons writing and expressing surprise that so and so minister would back VAT. Pardon me, but my surprise at the minister has no objective relation with his duty to press on with the business of governing this country. My surprise and that of 14,000 more like me might give him pause, but in the final analysis he and his government have a duty to govern. What that means to me is that they have been voted to make decisions for the people who elected them not to hold their finger in the wind and decide by the number of “boots on the ground”.

During the PPP’s last 10 years of government, there were a few boots on the ground objecting to the painting of taxis in bright yellow. That government wisely listened and then wisely pressed on with their decision. Now we can all see taxis by the dozen gaily passing by in their bright yellow. Whatever the reason for the decision was, it appears that it was not a bad move and the benefits to all outweighed the temporary inconvenience.

I see some claims that VAT being a tax on the consumer cannot be absorbed by the business. These people are arithmetically challenged. Divide the $10,000 fee by 1.14 and add the 14% VAT to the number you obtain and you will see magically that the fee to the parent does not increase. Try it. Of course there are those who have gotten to this point and reject the absorption of the VAT by the business as a solution. To quote our prolific Chris Ram in your letters column: “This means that the schools are being asked to reduce their gross revenue by 12.28%. …”

The figure of 12.28% is another way of representing the absorption of the 14% VAT by the school. Thus the figure is accurate. The problem with this figure, however, is that it has redefined VAT to be no different from a sales tax of 14%. The representation ignores the fact that the school is entitled to claim all its input VAT at the same rate (for example services provided by contractors that the government says must now pay VAT).  Perhaps Mr Ram knows that, as a practical matter, the new VAT regime has exempted so many of the candidate expenses for the school to claim against that the eligible input VAT would be exactly zero dollars. I do not have that information.

Of course, there is another dimension of this debate that does not get any attention at all. It is that only private schools that are registered for VAT can charge VAT. Those would be the ones who are above the VAT threshold. Therefore the answer to the question of what alternatives there are includes “other private schools.” This gives smaller private schools a temporary advantage if cost is the only criterion under consideration.

Perhaps this is the biggest point against the VAT imposition. One day the school you are sending your child to exceeds the VAT threshold. Suddenly, the fees are beyond you. But again, this assumes the effect of VAT is the same as the effect of a sales tax, which should not be.

This brings us to the real origin of the problem. To my mind it lies in the fact that the aim of VAT when it came up before 2007 was to be complementary to the personal income tax and other taxes. In other words, Dr O’ Toole should not be having to see VAT as yet another layer of expense. But the government of that day was so happy with its windfall that it took the VAT proceeds and kept the other taxes just as they were, including personal income tax. Chris Ram’s presentation on the 2017 budget snidely named the section on VAT ‘VAT runneth over’. The tax had been advertised then (prior to 2007) as a neutral tax ‒ meaning that government’s total revenue from taxes including VAT would not exceed significantly the total revenue before the VAT launch in 2007. As it turned out, someone in the Ministry of Finance of that day could not count. The government ended up raking in some 40% more in taxes. They were so happy with the windfall that they ignored every reminder that there should have been a downward adjustment in other taxes.

These are the objective facts that our intelligentsia should be considering. Somewhere along the way there has to be a VAT straw that breaks the camel’s back. Certainly for a parent taking his child to school and having to bear the same income taxes, the additional expense (if the school would not absorb it) is an objective reality.

Finally, it seems to me that what this government is really dealing with is what is called the NIMBY syndrome. Some years ago all communities in the US agreed that a burgeoning garbage problem they were experiencing at that time had to be solved by disposal in some one of the states. But everyone demonstrated actively – “not in my backyard,” they said. Hence NIMBY. In Guyana now it is Not my non-performing industry – don’t you dare close sugar. (I wonder whether it is too late for Linden to put some boots on the ground to get bauxite back?)  Not my tyres – try someone else’s old tyres. Not my mining lands. Not my scrap metal industry – allow me to carry away all the manhole covers, I have a right to them. Not my squatting area – regularize somewhere else. I don’t care about any drainage. Not my thieves – they are too rich, can’t you see they wear suits? They are not like those vagabonds who use guns. Mine used pens!

Yours faithfully,
Frederick W A Collins

Around the Web

Comments