Govt concedes to public pressure: VAT on education removed

Budget 2018

…pensioners get $500 increase
…countrywide rates and taxes may increase

By Samuel Sukhnandan

After months of public pressure from parents, civil society and the Opposition, Government has announced plans to remove the Value Added Tax (VAT) on private education, which will take effect from January 1, 2018.
The announcement was made by Finance Minister Winston Jordan, during his presentation of Budget 2018 in the National Assembly, who said the decision was based on representations made.

The concerns and protests against the 14 per cent imposition of VAT on private education tuition fees had prompted the Government to meet with parents and guardians in April.
However, the decision was never withdrawn, and President David Granger later stated that the imposed VAT was a means by which Government widened its revenue and tax base.
The President had explained that Government has to find $30 billion for education and these funds were sourced from taxation. But many persons had argued that it was unfair.
Jordan said Government would lose $342 million now that the tax has been removed. “At the same time, efforts will continue by the GRA [Guyana Revenue Authority] to ensure these institutions become tax compliant,” he said.
Meanwhile, the Finance Minister also announced that the tributors tax on gold miners has been slashed from 20 per cent to 10 per cent, and they would still be required to file annual tax returns.
Jordan said this decision was made following representation by the Guyana Gold and Diamond Miners Association (GGDMA), who had also met with the Opposition to raise their concerns.
“Both the GRA and the GGMC will intensify their efforts to bring operators in the industry within the tax net. Replacement of the current two per cent of the gross proceeds regime with a sliding scale percentage that is based on the price of gold,” the Minister explained, providing specific guidelines.
Opposition Leader Bharrat Jagdeo had called on Government to reverse the tax measures implemented by the Government on the mining industry, dubbing the taxation policy “draconian”.
Further, Government announced plans to conduct a countrywide valuation exercise to bring all property values up to date; as such, this could mean that rates and taxes may be increased.
Minister Jordan told the National Assembly on Monday that the valuation was aimed at helping town councils get sufficient cash to deliver quality services.
He noted that “outdated land values must be addressed” and that was one reason for Government allocating $2.9 billion towards helping to prepare for the next local polls due in December 2018.

Benefits
Despite these new measures, Budget 2018 contained very few benefits, one being the increase of Old Age Pension from $19,000 to $19,500, a 2.6 per cent increase. Minister Jordan noted that this increase represented an almost 49 per cent rise in just two and a half years.
The Minister also reminded that pensioners were relieved from the payment of departure tax, driver’s licence and passport fees. Additionally, he announced that public assistance would be increased to $8000, which represents an approximately 36 per cent increase over the period of two and a half years.
Teachers who work in interior locations will also benefit from the new measures to be implemented for Budget 2018, and these include an 80 per cent increase in remote area incentives.
The Finance Minister said this increase was aimed at cushioning the impact of the high cost of living in those regions. He noted that ensuring the availability of good teachers was vital for education advancement.
In an effort to move and retain teachers in far-flung areas of Guyana, he said the remote area incentive would be increased from $5000 to $7000 and from $9000 to $12,000.Amnesty
Meanwhile, companies and individuals will be granted amnesty to file outstanding tax returns in 2018. But Minister Jordan warned that if bogus returns were filed, individuals and companies would be penalised.
“Taxpayers who expect to benefit from this amnesty must file true and correct returns. Those found to be in violation will be subject to an audit and the attendant penalties and interest will be applied,” he said.
He said all corporate and individual taxpayers who have not yet filed true and correct tax returns and paid their taxes would have between January 1 and September 30, 2018 to do so.
He explained that taxpayers who file and pay all principal taxes on or before June 30, 2018, would have all interest and penalties waived. Those, he said, who file and pay all principal taxes between July 1, 2018 and September 30, 2018 would get 50 per cent of interest and penalties waived.
In relation to provisional licences, Jordan announced a temporary removal of the administrative procedure to be granted licences mainly for small businesses such as grocery shops and snackettes.
“After careful consideration of the current requirements, I propose that a provisional licence be issued for a period not exceeding two years…” he said.
The Finance Minister stressed that upon expiration of the provisional licence, no extension would be granted. This measure takes effect from January 1, 2018.