The middle class gets what it wants

Feb 19, 2017 Features / Columnists, Peeping Tom

The people have had a rude awakening. They thought that the Budget had only inflicted VAT on electricity and water consumption above certain thresholds. They are now realizing that the tax revisions in the Budget go much further.
Days after the Budget, they found out that they will have to pay VAT for internet-related services, they have to pay VAT to park and shockingly they have to pay VAT on private education. When they go to the private doctors and hospitals, they will be in for another rude awakening. They will have to pay VAT on the private health services they utilize.
They are now being faced with increased prices in the market place because of the removal of the list of zero rated items which previously could have been claimed as an input cost.
The 2017 Budget has brought additional burdens in its attempt to collect more taxes. But to be fair, the adjustment in personal income rates also means that everyone carries home extra money. The only problem is whether that extra disposable income can compensate for what we are experiencing now.
The government, during the Budget debate, when questioned about the imposition of VAT on health services, made it known that there is an option for those who cannot afford the tax to utilize public health services. It was the same explanation which was given when persons condemned the imposition of VAT on private education.
But the government has begun to buckle from the pressure which its own middle class is exerting behind the scenes. The government has offered clarification about VAT on private education. The explanation by the Finance Minister is detailed. I will carefully peruse it and share my opinion in a subsequent column.
It is really an unconscionable act for any country to tax education and health. Right now a private hospital is announcing a package of $250,000 for performing a caesarian section. Now, you may say well that person can save that money by having her C-section done at a public hospital. But that argument does not consider that the main reason why the pregnant mother goes to the private hospital to pay for her C-section is because she does not want to take the risk of losing her baby by having the operation done at the public facility.
When it comes to health, you cannot ask people to make a choice between private services and public services. That choice could mean a choice between life and death, because many people simply do not want to take the chances to go to a public institution.
Parents also want to give their children the best education because they know that with an education, the life chances of the child are better. Parents cut corners to be able to afford to send their children to private school. There are rich people who can afford to send their children to private school but there are poor parents who make a tremendous sacrifice to do the same and they are the ones who are now being affected.
Health and education are services which are simply not taxed because they are essential and vital services. But the government in either its wisdom or lack of it has decided to go that route because it knows the numbers, and it realizes the tax windfall which VAT on private education and health services provide.
I believe that is about to change, at least for education, since the middle class has spoken and the government has never ignored the concerns of the middle class when it comes to taxes.
Middle class supporters of the government are outraged over the imposition of VAT on private education. They have expressed their disgust at what has happened. They have always had greater influence on governments than the working class, even though we are supposed to have working class governments in place.
The middle class gets what it wants, because the leaders of governments either come from that class or are part of that class now. And this is why you can look out sooner rather than later for the announcement that there will no longer be VAT on educational services. Maybe before I get to analyse the Minister’s clarification.

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