VAT on education, healthcare will not develop Guyana – GCCI

says consumers at the mercy of increases

With the implementation of Value Added Tax (VAT) on services in the public utilities, education and health sectors, the Georgetown Chamber of Commerce and Industry (GCCI) believes this will be detrimental to citizens and development in Guyana.

During a recent interview with Guyana Times, GCCI President Vishnu Doerga had welcomed the overall reduction in VAT from 16 per cent to 14 per cent. However, he decried the addition of VAT on basic services.

GCCI President Vishnu Doerga
GCCI President Vishnu Doerga

“The overall reduction in the rates is welcome. However, the imposition of VAT on very basic services like education and healthcare, we do not believe are in the best interests of the development of Guyana,” the businessman said.

Asked about Business Minister Dominic Gaskin’s recent pronouncements that VAT would not drive away investors, Doerga noted that it was true that companies had the option to pass off the expenses to consumers.

“So while investors have a way of making sure that they can reclaim VAT, consumers do not. So it’s not the investors who will be hurt in the first instance, it’s the consumers of this country,” Doerga observed.

He noted that consumers “will then consume less, meaning that the private sector (will earn less), and that further affects the revenue (due to) less taxes being paid by the private sector, which is the longer term effect.”

Director of the privately owned School of the Nations, Dr Brian O’Toole, is also one of the latest in a line of critics of the VAT on education fees. He recently expressed that this was not a move the Government should want to make in 2017, as the imposition of extra charges on school leavers and other disadvantaged youths might bring their valiant efforts to get an education to a halt.

Management of School of the Nations and its sixth form students have since launched a petition against the tax on their education, with the aim of showing just how unpopular the tax measures are.

Government had reduced VAT from 16 per cent to 14 per cent. It had also increased the VAT threshold from $10 million to $15 million. This means that it is not mandatory for certain businesses with an annual income lower than $15 million to register for VAT.

In an unprecedented move, however, the 14 per cent VAT was applied to those whose electricity consumption exceeded $10,000 per month. The extra charges were also slapped on those whose water consumption exceeded $1500 per month.

Except for the ones relating to exports and manufacturing, all items which were previously zero-rated were removed.

When he made his presentation last year, Finance Minister Winston Jordan had projected a rise in VAT collection of 1.7 per cent, amounting to $36 billion.

The main Opposition People’s Progressive Party (PPP), however, has long denounced the Government’s method of taxing its way to wealth generation. Chairman of the Public Accounts Committee in Parliament, Irfaan Ali, has maintained that the expanded areas of taxation will increase the burden on Guyanese and local businesses.

Ali had observed that in relation to pharmaceutical and medical supplies, the cost of accessing private medical services will increase dramatically. But that’s not all.

He had expressed that private medical staff, such as nurses, medics, laboratory technicians and others may face the risk of losing their jobs, since patients will now be forced to seek medical service from public hospitals, due to prohibitive costs.

All announced changes to VAT took effect from February 1, 2017.