The Government has kept its campaign promise on VAT

Jun 14, 2017 Letters

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Dear Editor,
The business of the media is to report the truth about whatever subject it chooses to report on as objectively as it could. John Pilger reminds us, “It is not enough for journalists to see themselves as mere messengers without understanding the hidden agendas of the message and the myths that surround it.”
Your editorial, “Trust”, of June 12, provides a good case of your newspaper being a messenger without understanding the hidden agenda of the message as well as being ignorant of the subject on which the editorial is based.
The writer attempts to impose his confusion on the reading public, as if those assumptions are true and correct. But, he is completely wrong about the claims he is making about the VAT.
I wish to state categorically that the Ministry of Finance did not “err” in its computations or produced “inaccurate figures” during the deliberations on the tax measures introduced in Budget 2017. All of the tax measures were produced en bloc and not in pieces, as the writer seems to suggest, to correct some wrong.
The reduction of VAT was a promise made by the government, during the campaign; it has kept that promise. This government has the foresight to understand that tax reform cannot and should not be done in a piecemeal manner. And, it has the fortitude to implement bold measures to correct imbalances, and stimulate as well as promote growth in the economy.
Therefore, while reducing the substantive VAT rate, from 16 percent to 14 percent, other tax measures, such as widening the base and increasing the threshold, were done simultaneously. The inclusion of VAT on water, electricity and private tuition was not an afterthought, as presumed and promoted by the writer. As explained on several occasions, these and other previously untaxed goods and services were included as part of the broad-based reform of VAT. The writer is being more than deceptive when he fails to indicate that a number of items were, at the same time, removed from the payment of VAT, for example, sanitary napkins; or removed from the “zero-rated” category to the “exempt” category, thereby obviating the tedium of seeking refunds.
Your writer refused to acknowledge that concomitant with the reform of the VAT was reform of the individual and corporate income taxes. Collectively, VAT and Income Tax reform is expected to cost the Treasury $10 billion on a yearly basis.
Your writer may be interested in the following: First, as at May 31, 2017, VAT revenues were down by $1.8 billion, when compared to the similar period in 2016. Second, while revenues collected by GRA had grown by over $2 billion at the end of May 2017, over $4 billion was due to the relentless efforts of GRA to collect arrears.
Your writer may find the following instructive: in a meeting between the Minister of Finance and a private sector body, held in early May, 2017, the claim was made that the VAT on water was “killing businesses”. That body was stunned to learn that GWI was in breach of the law; they had not begun to collect the VAT because of a glitch in their computer system. This shows how several persons, bodies and institutions are cavalier in their haste to blame VAT.
The introduction of the regime of taxes included in Budget 2017 is designed to ensure that citizens pay their fair share of taxes, rather than continuing to have selected groups, such as the public servants, carry the burden of lawless tax evaders of all kinds. When all of the persons, who are earning a taxable income, begin to pay their taxes, the government will be able to do more for the citizens and infrastructure.
For far too long, public sector employees have borne the brunt of taxation. It is why within the last 24 months the government has hastened to increase the minimum wage by over 40 percent, far in excess of what the previous government offered in twenty three years, except for 1999 and 2000 when they were compelled by the Armstrong Award to offer 30 percent and 26.66 percent respectively. The income tax threshold was also increased by a minimum 20 percent while the income tax rate was reduced.
Editor, these are facts which any of your readers can verify; facts that they can trust, quite unlike the crass fulminations of your writer. The information provided here has been in the public domain for months now. Your writer, like every other person, is entitled to his own opinion, but not his own facts. The greatest test of a government is the rantings of those who have unbridled access to the press.
Wanita Huburn
Public Relations Officer
Ministry of Finance

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