Reality of our tax money

Sep 28, 2008 Peeping Tom

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Peter R. Ramsaroop, MBA
Chairman, Vision Guyana

INTRODUCTION
Without our businesses generating jobs and paying taxes, the Ministers of Government will be like most of us, devoting great amounts of time in the daily struggle to survive.

It is our tax money that pays the Ministers for their expensive vehicles, for their drivers, for their gas, in some cases for their first class travel when they go to other countries, for their entertainment such as when you see them out in public and they offer to buy you a drink, it is quite often our money that they are using.

Dr. Jagan, who I respected for his struggles of the people of Guyana while in Opposition, shocked all of us in 1992 after he won the election and moved into the biggest house in Guyana (State House).

He immediately forgot what it was like to be poor and enjoyed the luxury of the colonial masters he and the current president so vehemently rejects.

The current administration has continued to tax our people with the highest of tax rates in the region. When any key official is sick, they all go to the United States for medical care; none ever go to Cuba or Russia for medical care.

WHERE DOES GOVT GET MONEY?
In my Wednesday’s economic corner, I brought to your attention the high taxes we pay on vehicles. I myself was shocked that a vehicle which can be purchased in America for US$40,000 will cost someone in Guyana the equivalent of US$128,500.

This vehicle, if exempt of Guyana taxes, would cost the equivalent of US$42,700, which means that the Duty, Excise Tax and Value Added Tax represent the equivalent of US$85,800 (2 times the cost of the vehicle).

Prior to the introduction of VAT, when vehicles were subject to Duty, Consumption Tax and Purchase Tax the total taxes represented approximately 1.75 times the cost of the vehicle.

This clearly shows that the introduction of VAT (and Excise Tax) caused a significant increase in the price of new vehicles to the consumer, unlike Government’s claims that VAT would have resulted in tax and cost reductions. This was a Burnham era tax levied on the wealthy during the socialist days.

When the communists came into power in 1992 they kept it there to prevent the masses from acquiring the same vehicles they now drive. If the law had changed, you too could be driving a new Pathfinder or BMW alongside the government official.

I bought a house for $25M and spent about $10M changing the entire electrical and plumbing system. I decided to sell the property for 35M in order to invest in another.

The Guyana Revenue Authority refused to give me any credit for capital investments and made me pay taxes on the 10M as profits, even though we clearly, as they requested, provided full receipts of work done.

Finally someone told me, I was naive, I should have just paid them off and it would have been okay because that is how it is done in Guyana.

The Corruption Index released this last week proved that theory as we are the second most corrupt country in the region.

Here are some of the taxes we pay:

1.Value Added Tax (VAT) 16% on purchases (Clothes, Food, Entertainment, Restaurants, even when the fees by your accountant to do your taxes is charged an extra 16%, so to pay your taxes, your accountant must also pay GRA.

2. 33% Income Tax on all wages above the 35,000 Threshold. No tax credit for child care, etc.

3. 33% on all Rental Income.

4. Two times the cost of a new vehicle and double the cost on older vehicles based on size of engine. No credit is given for Clean Gas vehicles such as the Hybrid models even though we want to sell our forest for Green credit.

5. 5.6% National Insurance Scheme

6. Corporate Taxes if you have a small or large business

7. Fitness for Your car (Annual)

8. Licence Fees (Annual)

9. Rates and Taxes (Annual)

10. Property Taxes (Annual)

11. Bribe Tax (for some)

CONCLUSION
It is our land that is given to a few select people with concessions; it is our land that will produce oil, and it is our tax money that pays for incompetence in management of our sugar and rice industry. We were rated one of the most corrupt countries in the world this last week.

We have many hundreds of thousands of people in our country who cannot afford a bicycle, a motorcycle, much less a car. Many in the back of Port Mourant are still without electricity and running water.

Many of our school children sit on latrines riddled with diseases, many salaries per week cannot even pay for transportation.

For a country that collects so much tax from its people, one would expect we would see it back in teachers’ wages or tax rebates to us. I want to leave you with this thought:

“Next time you see a government minister in a beautiful vehicle, or you are treated badly at Customs or asked for a bribe by a Policeman, remember, you are the one that is paying their bills per month to treat us with disrespect.”

We need our taxes reduced, we need for government to stop raping us of our hard earned dollars and doing it with a smile, and we need a government that is for all of the people, not some of the people.

Send comments and responses to [email protected] www.visionguyana.com

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