Too many increases in too short a time

Mar 31, 2017 Features / Columnists, Peeping Tom

The prices of some things have to increase at some time or the other. But the prices and costs of everything cannot increase at the same time.
Guyanese have been paying low fees for a number of services. The government reviewed these fees and increased a number of them. It was a case of too many fees being increased.
Dray carts, for example, were required to pay an increased fee. The result was that those affected by the higher fees increased the cost of their services.
If you have a few pieces of lumber to move within a radius of one mile, you are now going to have to pay at least $2,000 by a horse cart to do so, when previously you would have paid a mere $1,500.
The increase in fees, therefore, has affected consumers. This was compounded by the fact that more than fifty fees and taxes were increased. It was too many increases in too short a time. This has led to a sharp increase in the cost of services and some increases in prices.
The government did not properly think through the VAT on electricity and water. It thought it was only targeting the rich by taxing electricity above $10,000 per month and water $1,500 per month. The government should have foreseen that the very rich people it was targeting included the small shopkeepers whose electricity bills are in excess of $10,000 and the various bars, hotels, restaurants, green grocers, butcheries, supermarkets boutiques, barbershops etc. These entities automatically increased their prices even before they got their first electricity bill which attracted VAT.
How could the government not have seen this obvious fact? Which shopkeeper is going to pay higher electricity and water bills and not increase rentals?
Then on top of this, the government placed a tax on every container, local or foreign, to replace the old environmental tax. Immediately, the prices of soft drinks went up in the shops to cater for that tax.
Did the government not feel that the shopkeepers and importers would have passed on this increase? Did the government feel that these persons would absorb the increases?
Then we had a tax on private tuition fees. Then there was the parking meter imposition. Now we are learning that the University of Guyana is examining a proposal to increase fees by 35% over a three-year period – beginning with a 15% this September for continuing students.
What is really going on in Guyana? How much pressure does the government intend to inflict on the Guyanese people? These are far too many increases in too short a time. It is not right. It makes no sense. The government will lose popularity. You cannot run a country in this manner.
The math simply is not adding up. You are taxing private tuition to garner $300M. This will affect thousands of students. Yet you are spending $300M on two small boats for the Coast Guard that are not the type of boats which foreign coast guard use to run down boats.
The City Hall was hoping to rake in $240M per month from the parking meters. Guess what, yesterday they announced that four wards in the city alone owe them one billion dollars.
So why is the pressure being placed on citizens via the parking meters when City Hall should be going after defaulting ratepayers.
And yet it was the government which approved of the by-laws which imposed the onerous parking meter system on the public, and later was forced to suspend the very laws which it had approved.
There is total confusion of the suite of tax measures in the Budget. The argument has been made, persuasively, that exempting items in the Budget does not necessarily lead to a reduction in prices.
There is confusion over VAT, because in one year the strategy was to zero rate items, and then when the GRA began to be overwhelmed by refunds, the strategy changed to one of exempting items. All of this is giving people headaches. It is too much at any one time, much less at a time when the economy is “righting itself”.
The pressure is piling up. The Guyana dollar has devalued. Do not bother with all that jazz about what rates are advertised. You cannot obtain foreign currency easily at those rates. Prices are going to increase as a result of the devaluation. Importers are not going to absorb any increase; they will pass it on.
The people are being pressured unnecessarily. How much more pressure will they have to bear?

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