Roll back VAT on private education, health

Dear Editor,
If Guyana is to experience economic growth and real development, and relative equity in income distribution among the various classes, the State has to stop penalising the productive sectors of the economy. It can begin to do so by ending VAT taxation on critically important sectors like education, manufacturing and health care, and it has to give untrammelled freedom to the Private Sector to perform.
As Dr Ramesh Ganpat correctly critiqued, why is the State penalising two of the strongest pillars of growth (private education and health care) both of which provide essential services and jobs for so many? Without the role of the Private Sector, these two essential services would have been overburdened in the public sector.  Health care would have deteriorated, not that it is good in the public realm. VAT will drive people away from private education and health, burdening the State with these basic needs, and reducing employment in the Private Sector.
The VAT policy just does not make sense. Taxing private education and health care is a bad move. Contrary to what Government claims, many recipients of these basic services cannot afford the VAT. The rich makes up only a small percentage of those who seek private health and educational services. The overwhelming majority are from the middle class and even some among the poor. So Government is taxing those who cannot afford to pay it and will drive them to public health and educational facilities.
Taxing usage of water, electricity and other utilities can be a good tax if the goal is to reduce consumption in the face of shortage or scarcity – water is a scarce natural resource and conservation should be encouraged. But on education, youngsters must be encouraged to get an education to join the productive sectors of the economy. People should not be punished for seeking the best health care.
The Government does not have the time or resources to provide education and health care for the entire population. The Private Sector is providing relief to the Government in both areas and providing better services in both, when compared to the Public Sector. In addition, a lot of jobs are created by businesses in the education and health sectors – another relief for the Government in finding jobs for the large pool of unemployed. And besides providing relief to the Government, the Private Sector has been found to be more efficient in delivering education and health service.
As been experienced in Guyana, the Private Sector is more efficient than the State Sector in virtually every economic endeavour. This has been proven repeatedly during the PNC tenure in office between 1965 and 1992. During that period, over 85 per cent of the economy was under State control and the economy quickly became bankrupt. The Private Sector came to its rescue in 1990 turning around the economy to achieve positive growth after decades of negative growth and/or underperformance. The Private Sector reduces inefficiencies and excess flab, and creates productive jobs that lead to growth.  It also brings in critical foreign currency, which is heading in shortage direction as reported by the central bank.
To become prosperous and wealthy, the country has to become efficient. And to achieve those objectives, the State has to get rid of the deadwood holding back the economy.  VAT is a deadwood on the productive and service delivery sector; the consumption sector VAT can be excused to reduce extravagant spending, but not the educational training and health sectors; spending on health and education should be encouraged as the nation benefits from them in the long run. The country has to train people to put the economy on a strong growth path.  Those without skills must be trained.  Government cannot tax them out of education and skills. In so doing, they are being denied the necessary skills to improve job prospects. And as they study, work and age, their health must be attended to. Putting a VAT on their visits to the medical services is a bad idea; it will discourage them to visit the doctor to monitor their health. Worse, it will cause many to abandon private care givers and go to the Government health centres, overburden the public facilities and everyone loses. It is in the national interest to remove the VAT on education and health care.

Yours faithfully,
Vishnu Bisram