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Govt.’s revenue increase proves it can drop VAT on private tuition – Chris Ram
—Finance Ministry officials strongly disagree
The views for and against the imposed Value Added Tax (VAT) on private tuition have been many. So far, the public has succeeded in twisting the arm of the Government to at least consider reviewing the tax for the 2018 budget.
Chartered Accountant, Christopher Ram
While Government is making no promises as to what might be the outcome of that review, one citizen is offering a final clinching argument.
According to Chartered Accountant Christopher Ram, the tax revenues for the government have actually increased. As such, he believes that the administration, which wants to bring “the good life” to all, can more than afford to drop VAT on private tuition.
Referencing some statistics, Ram said that the Ministry of Finance has disclosed that tax revenues for January 2017 were $11.9 billion. This is 40% more than tax revenues in January 2016. Additionally, total tax revenue for the entire 2017 was budgeted at $162.7 billion, or 8.67% over 2016.
Ram commented, “Clearly, it is not expected that total tax revenues for the entire year will match the 40% increase, but is there any reasonable observer who will say it is not going to be much more than 8.67%, more than enough to make up the $350 million? All it would require for the Government to replace the $350 million it has said it will lose by removing VAT on education services would be a meagre 0.22% over the 2017 budgeted revenue.”
The Financial analyst said that the January figures, which come from no less a place than the Ministry of Finance, remove the final straw of an excuse that Prime Minister Moses Nagamootoo and others made for the retention of VAT on education.
EXPENDITURE
While Ram holds the opinion that the tax could be dropped due to the increase in revenues, there are officials at the Ministry of Finance who strongly disagree with this line of argument.
The officials said that the document from which Ram obtained the statistics is on the website of the Ministry of Finance. The document is titled, “Monthly Economic Bulletin – February 2017.” The link for the full report is: http://finance.gov.gy/images/uploads/documents/meb_-_february,_2017.pdf)
The officials agreed that there has been an increase in tax collections for January. They noted, however, that expenditure was also augmented.
According to the document, Central Government expenditure amounted to $15 billion in January 2017. For the same period in 2016, it was only $7.7 billion.
The Finance Ministry explained that the increase this year for January was mainly due to the early passage of Budget 2017. It was also explained that in January 2016, spending was restrained, as agencies were only allowed to spend up to a twelfth (1/12) of their current budget. However, for January 2017, agencies were able to spend their entire current budget allocations.
In January 2017, $3.9 billion was expended towards employment cost, an expansion of $585.8 million or 17.4 percent, when compared to the same period in 2016. This growth catered for new recruits as well as the annualization of 2016’s salary increases.
Furthermore, $1.5 billion was expended under other goods and services, a growth of $845.6 million or 129.3 percent over January, 2016. This expansion was attributed to the early passage of Budget 2017 which facilitated an early commencement of the work programme in subcategories such as maintenance, purchase of materials and supplies, and also early payment for utility services.
The officials also stated that $7.2 billion was spent on transfer payments for January 2017, an increase of $4 billion or 127.5 percent, compared to January 2016. This expansion in transfer expenditure was mainly due to a $3 billion subsidy given to the Guyana Sugar Corporation, to cater for operational expenses.
Additionally, outstanding payments were made to contractors for works done on the D’Urban Park Development.
Given the aforementioned, the officials said that they simply could not side with the “selective” perspective provided by Ram. They insist that while one is paying attention to the increase in Government revenue and tax collections, one must also take heed of the expense before the nation.
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