Taxation (VAT) on private education in Guyana

Dear Editor,

During the last elections campaign, one would recall that President David Granger was a strong advocate of strengthening and improving the country’s education system, or in other words, his emphasis was more on the quality of education. The philosophy of this agenda was centred on the notion that education is the underlying pillar of economic growth and prosperity.

This article argues that the imposition of Value Added Tax (VAT) on private education contradicts and undermines this philosophy.

Now let’s examine a country that employed such a model which proved to be highly-effective in achieving this outcome and has actually placed that country in an enviable position in terms of sustainable economic growth.

An examination of the history of economic development of Singapore revealed that about 50 years ago, this country was an undeveloped country of a Gross Domestic Product (GDP) per capita of less than US$320. This country is now one of the world’s fastest-growing economies with a GDP per capita at an incredible US$60,000, making it the sixth highest in the world according to Central Intelligence Agency figures. For a country with no territory and natural resources, the economic ascension of this country can only be characterised as remarkable. By embracing free market capitalism, globalisation, education and strict pragmatic policies the country was able to become a global leader in commerce by overcoming their geographic disadvantages.

No country or government in the world is able to practically offer education services to 100 percent of the population through public/State-owned schools and universities. In most of the advanced economies, private educational institutions outnumber the State-owned. Additionally, the private schools and universities in most countries earned an evidentiary based reputation of producing most of the top students and providing higher quality education.

Refocusing on our country, Guyana, we have seen over the last few years private schools across the country churning out most of the top performing students at the Caribbean Secondary Schools Examinations.

In an attempt to defend this tax measure, the Finance Minister posited parents/students have a choice, stating that public education is free. This response seems to have omitted the fact that should such an approach be pursued, the public schools would not be able to accommodate all these students and hence, it is not practical.

Another point of interest which can be deduced from this tax measure is that it appears the Central Government is competing in the education sector.

Such a move should not be, as a government’s fundamental role should be to create the framework that fosters and support higher quality education and at affordable costs, regardless whether it’s private or public. By increasing the cost of private education, specifically at the tertiary level, could potentially lead to inaccessibility of this service by a large number of potential students. Again, from a pragmatic standpoint, the University of Guyana is the only national tertiary level educational institution in Guyana and thus it cannot, by any means, serve the entire population of the country. Hence private institutions at this level are rather highly imperative.

By investing heavily in education and at the same time ensuring it is affordable and accessible to all, would serve as the underlying factor in respect of being the catalyst of economic prosperity of the nation.

In concluding, readers would have recognised that the reference made to Singapore earlier as a benchmark country, is a country that had ironically gained independence around the same time as Guyana and has become one of the most economically stable and prosperous countries in the world. Serving as the catalyst of this phenomenon was the investment in education that brought this country where it is today. Noting importantly that it does not impose any VAT ‘per se’ on private schools and universities.

Against this backdrop, our policy makers and political leaders are therefore strongly encouraged to seek to adopt a model akin to this. Consider abandoning the tax measure imposed upon private education and allow this paradigm to be the enabler that will reshape the economy in terms of propelling expansive economic growth.

And lastly, education is a basic right. Thus increasing the cost of education to a certain section of the populace could be interpreted as denying persons of this basic and fundamental right.

Sincerely,

Concerned citizen