Govt divided over VAT on private education

As resistance continues to the imposed 14 per cent Value Added Tax (VAT) on private education, Government seems divided on its stance.
Although Cabinet has already ruled that a review of the education tax will take place until next year, the Alliance For Change (AFC) arm of the coalition Administration intends to challenge that decision.
According to Leader Raphael Trotman, the AFC will be advocating for the review in light of the negative feedback received regarding Cabinet’s decision to keep the VAT on private school fees.

“The AFC is going to be pushing for a review and, as I said, we hope it comes sooner rather than later, but, at the end of the day, we are a part of a coalition and are aware that sometimes pulling one string has corresponding consequences,” Trotman, a senior Government Minister, is quoted as saying in another section of the media.
Trotman explained that the issue was debated at Cabinet, but at the end of that deliberation, a decision was made to maintain the VAT on private education.
According to him, it is easier to make a decision than to reverse it.
“It is akin to pulling a thread in a fabric,” Trotman told another newspaper during an interview.

Efforts to contact Education Minister, Dr Rupert Roopnaraine for his views on the AFC’s resilience proved futile as all calls to his phone went unanswered.
Minister of State, Joseph Harmon, during the recent post-Cabinet press briefing, disclosed that Cabinet, which usually made unanimous decisions, agreed that the education tax would remain for 2017, but would be reviewed for 2018.
“The views of stakeholders were reported to Cabinet, and Cabinet took into consideration those views which were made public at that forum; and after having a full discussion on this matter, it was the decision of Cabinet that the VAT on private education would remain in accordance with the budgetary projections for 2017,” he stated.

He noted, however, that it would be reviewed for the 2018 National Budget, for which preparations would commence in June.
The initial announcement of this position was made during the “consultations” held between Government and stakeholders who have been vigorously protesting against the tax on private tuition.
Following that announcement by Prime Minister Moses Nagamootoo, distraught and disappointed stakeholders stormed out of the consultation, and have threatened to continue their resistance against Government in various forms.
Several protest actions have since been held, with concerned stakeholders lashing out at the Administration for wasting their time and holding a window-dressing exercise.
They are not satisfied with Government’s decision and have pledged their commitment to continue to oppose the education tax.
In fact, a protest is being organised for Wednesday outside the Ministry of the Presidency on Vlissengen Road.
President David Granger, during the most recent broadcast of the “Public Interest” programme, said persons needed to be more patient, tolerant and reasonable. The Head of State explained that in fulfilling a campaign promise, his Administration reduced VAT by two per cent and, therefore, it had to find ways to generate revenues which would be lost from that reduction.
But Opposition Leader Bharrat Jagdeo, at his Party’s weekly press conference on Monday last, pointed out that Government could afford to drop the imposed VAT on private education, which became effective on February 1, 2017, by slashing spending in unnecessary areas in order to maintain its desired revenue stream.
According to Finance Minister Winston Jordan, Government has projected it would earn over $350 million per year from the VAT on private education. He has contended that the education tax was necessary, because a number of private schools did not pay their full share of existing taxes, but Jagdeo argued that such an explanation defied logic.
According to the Opposition Leader, Government seems to have its priorities backward, since it could save much more than $350 million per year if it immediately rescinds the salary increases and lavish benefits given to Ministers.
“The salary increases that Ministers took in addition to their benefits will be more than $350 million alone! Are they saying that they have greater priority in terms of needs to State funds than the 20,000 students in Guyana who are going to private institutions?” Jagdeo queried.
Jagdeo has further slammed Government over other “unnecessary spending”, such as the $3.5 billion tax write-off to Demerara Distillers Limited (DDL); sums of money being spent on the “fixing up” of State House and the Ministry of the Presidency; and also the $12.5 million of taxpayers’ money being handed to AFC financier Larry Singh for the Sussex Street bond, which could have otherwise been utilised to bolster revenues instead of taxing private institutions.