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VAT again!

Mar 20, 2017 Features / Columnists, Peeping Tom

The Guyana Revenue Authority reported this week that the Peeper was being erroneous when he suggested, in previous columns, that Value Added Tax (VAT) was applicable on medical services at private hospitals. The GRA pointed to the publication of the list of exempted items to show that this was not the case.
I leave it to the public to decide whether it was the intention of the government to impose VAT on medical services including doctor’s consultations and hospital fees.
I refer to the Budget Debate and specifically the 49th Session of the 11th Parliament. The record for that session reports a PPP/C member of parliament, in his presentation, asking the government to state how much money it would make by imposing the 14% VAT on medicines and health services. The opposition MP also demanded to know the economic impact, including on the poor, of such measures.
The PPP/C MP said that the imposition of the VAT on health services and medicines would have a negative impact on public health gains, including the fight against HIV, since VAT would be placed on condoms.
A government Minister in response said as follows and I quote, “I want to say to this House that there is a public hospital which is free, that offers all the services to the poor people of this country. If anybody wishes to go to a private hospital it means the person has money.
If you want to have cosmetic $2M expense at the dentist, then you must pay VAT.”
I leave it, as stated before, to the public to decide whether the government was denying that it was imposing VAT on medical services or whether it was justifying the proposed imposition of such taxation on medical services.
Now that we have heard from the GRA that there is no VAT on medical services, the question has to be asked as to whether the government has backed down from imposing VAT on medical services.
The answer to that question has implications for the VAT on private education, because almost the same justification was used in relation to VAT on private education.
It was stated that public education is free and therefore does not attract VAT. In other words, if you cannot afford to pay the VAT on private education, you have a choice to attend public schools. This is similar to what was said about VAT on private medical services.
There was hardly any mention in the Budget debates about VAT on private education.
But as mentioned above, comments were made about VAT on medicines and medical services provided by private health care providers.
There are two main implications involved. The first is to question whether the imposition of VAT on private education is a substitution for VAT on private health care services. The government should clarify this issue by stating what its original intention was, when the Budget was first tabled.
The second implication is that if it was indeed a situation in which the government has backpedaled from imposing VAT on private health care, then the same can now be done for VAT on private education. The government does have the power to revoke VAT on private education.

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