VAT on water, electricity are conservation measures – Finance Minister

Nov 30, 2016 News

Finance Minister Winston Jordan during a post-Budget press conference on Monday evening explained to the media that the imposed 14 per cent Value Added Tax on electricity and water bills should be seen as a conservation measure.
The Finance Minister announced that VAT will be reduced from 16 to 14 per cent as of 2017. However, the new VAT rate will be applied to the electricity and water bills which exceed $10,000 and $1,500 respectively.
Jordan said that if persons pay attention to their meters they can ensure that their consumption does not go past the thresholds.
He said that on numerous occasions it was indicated that to reduce VAT, government would have to make it up in other areas. Hence, the Minister said that things which were not being paid for, Guyanese would eventually have to pay.
“I remember in many interviews I did, I specifically mentioned that water and electricity will become fair game under VAT where we have to reduce measures. We made certain that it is not everybody who will be paying this.”
Jordan said that most people would not be troubled by the VAT, based on the studies which would have been carried out prior to the decision. He said that the charge on the threshold should encourage persons to monitor their consumption by observing their meters so as to reduce their use. He said that the conservation aspect falls in line with the extensive green agenda which is elaborated in the 2017 budget.
Present at the press conference was Prime Minister Moses Nagamootoo, who said that of the 138,000 customers who subscribe to the Guyana Power and Light, 105,000 residents and 4,800 businesses pay less than $10,000 for electricity.
Nagamootoo said, “And that means that 80 per cent of customers pay less than $10,000 a month in electricity. So the 80 per cent would not be affected by VAT.”
The Prime Minister said that government is trying to introduce a mechanism that tells Guyanese that electricity is a scarce resource. He said, “While GPL may want to make money, it also has a national responsibility to ensure that people use electricity responsibly. Conservation is not a matter anymore of exhortation.”
Nagamootoo added that conservation is a matter of national interest, so that all people in Guyana can have access to an affordable supply of electricity and water. He said that the reduction of VAT to 14 per cent is a fulfilment of a promise which the coalition made to the electorate.
According to Jordan in his budget speech, taxation influences the choices persons make. He said that such decisions ultimately have an effect on the rate of growth in the economy, the basis of increased prosperity and the pathway to the good life.
Jordan announced that the decision to go ahead with tax reforms benefited from the work done by the Tax Reform Committee which was established in August 2015 as well as the Caribbean Regional Technical Assistance Centre (CARTAC) report on VAT.

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VAT on water, electricity are conservation measures – Finance Minister

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