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A hidden tax?…Manufacturers protest plans to exempt zero-rated items
A number of businesses are expressing deep concerns over plans by Government to eliminate all zero-rated items from taxes and make them exempt.
Finance Minister, Winston Jordan (L) speaking with his colleague ministers on Monday at the Parliament Buildings.
On Monday, Finance Minister Winston Jordan, in his budget speech, announced a proposal to expand the list of exempt items and eliminate all zero-rated items, with the exception of those pertaining to exports and manufacturing inputs.
In essence, the move will increase manufacturing costs for local companies as they will not be able to claim back the taxes paid on every item or input bought, it was argued yesterday.
Currently, businesses are allowed to claim back those taxes.
“By changing these products from zero rated to exempt means no tax would be charged, as this is now deemed an exempt supply. Because it becomes an exempt supply rather than a taxable supply (at 0%), companies like us cannot help but pass these charges to customers. The bottom line is that local products will become more expensive,” one businessman explained
According to a number of businesses, the matter will be raised in coming days with the Guyana Manufacturing and Services Association (GMSA) with the hopes Government cancels its plans.
“This VAT paid now becomes an expense to us and will increase our costs. Our products then become more expensive than imported ones which are not saddled with this cost. If we pass this cost to the consumer, we cannot sell our products, as it becomes more expensive, so we have to absorb, which means less profits. In a way it is a hidden tax on businesses,” one senior executive said yesterday.
The exempt items include things like bread, flour, unprocessed wheat, toilet tissues in rolls, vegetable seeds, paddy, onions, garlic, potatoes and split peas, among other things.
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