VAT IS NOT THE PROBLEM

Apr 12, 2012 Features / Columnists, Peeping Tom

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The call for a reduction in VAT is misplaced. Guyana has a lower rate of VAT than many other countries which are not as dependent as Guyana is on Government revenues.
Already a large number of basic food items are free of VAT. So what else can VAT be removed from to alleviate the effects on the poor? Whatever else is removed at this stage will help not just the poor but also the rich and therefore given that a large number of items are already zero-rated, it makes no practical sense to reduce VAT.
Those who are calling for VAT to be reduced are really not understanding the problems facing consumers. Even consumers themselves do not seem to understand their own predicament.
Those who are calling for a reduction of VAT are playing politics with the people of this country. They have gone so far as to say that the president is not keeping his campaign promise as regards VAT.
All that the president promised on the campaign trail was a commitment to review the VAT. This was one of the first promises that was implemented after the elections when the president appointed a team to conduct a review of the VAT. The team is still at it.
What is needed, however, is not a reduction of VAT but a commitment to use whatever increase accrue from VAT collections to increase the income of workers. Instead of reducing VAT what is needed is an increase in income for workers.
The government has unfortunately been dodging the issue of paying a living wage. This is very disappointing considering that the PPP is supposed to be a working class party.
One can recall the insult that was thrown the way of sugar workers when they were offered a three per cent increase years ago, and then told a year after that an increase could not be paid.
Then in an election year, the government attempted to buy their votes with an increase which all along the government had been claiming could not be paid.
Workers need more money. Pruning may be one way to go but pruning ultimately means reducing the workforce and this is not what is desirable at this time.
Cutting out super-salaried employment is also proposed as a solution to the problem. It is however not. First there is no such thing as a super-salaried worker. Those who are described as super salaried are simply being paid competitive wages. What is needed is not less super salaried workers but value for wages. There are far too many PPP acolytes around who are doing very little for what they are earning.
Instead of pruning them, they should be made to work harder. There are many of them who are simply being placed on the state’s payroll and not performing. They should be told that they have to start performing or they will be ditched. There is no room for slackers at this time. The fact that someone is from the ruling party should be no excuse for that person to occupy a senior position and not doing anything.
Then there are many pensioners in the employ of the state and they are being kept on because it is said that there are no replacements. Guyana must therefore be in a bad shape if after 20 years of PPP rule, persons still have to be kept on beyond retirement because suitable replacements cannot be found.
There are young people throughout the public service who are being denied upward mobility because of some old geezer whom the government says is irreplaceable.
We should be encouraging the government to replace those retirees and also to pay higher wages. It has been disgraceful that the PPP has so far failed to implement a living wage in this country despite all the years of impressive economic growth and huge revenues collected as a result of a move towards a more efficient tax system.
The tax system is bringing in more revenues each year. Reducing VAT is not the solution. Instead the VAT rate should remain and there should be a concerted effort to collect more taxes. But when these taxes are collected, they should be applied to paying workers better instead of ending up in the hands of unscrupulous contractors who rip off the government.
While it may not be possible to pay all workers a hefty increase at the same time, the government should begin by paying teachers, nurses and policemen increases. The others should be told that they will have to wait.
The resources can be found to pay these categories of workers at least a 50 per cent increase on their basic salaries. No teacher should be carrying home less than $80,000 per month. No policeman should be earning less than $100,000 per month and no nurse the same.
The resources can be found to fund these increases. If the government can find billions of dollars to invest in a hotel; if it can find billions of dollars to build a drainage outfall; if it can find billions of dollars to buy laptops, if it can find billions of dollars to build the Amaila Falls Access Road, it can damn well find the money to pay teachers, policemen and nurses more.
It is time for the excuses to stop. The workers of this country deserve better. They deserve higher pay.
When workers are paid better there will be no need to reduce the VAT because the workers will come to the realization that it is not VAT that is the problem but their poor earning power.

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