Gov’t comfortable with VAT at 14% – Finance Minister

Nov 07, 2017 News

Ahead of his 2018 budget presentation, Minister of Finance Winston Jordan says Government is comfortable with the Value Added Tax (VAT) at 14%, but has left the door open for further reductions as the tax base expands.

Minister of Finance, Winston Jordan

A motion submitted by the (People’s Progressive Party/Civic) sets out to reduce VAT to 12% in keeping with a campaign promise made by the coalition Government. It is highly unlikely that the PPP/C’s motion will be debated before Jordan’s Budget presentation on November 27.
“If it [the motion] comes up after the budget its moot,” Jordan stated.
He added, “I don’t know about anything about reducing VAT to 12%. We have reduced VAT to the level that we are comfortable with and the budget can accommodate, and that’s to 14%.” After taking office in 2015, Government reduced VAT, which was 16% at the time.
Jordan stated that the pace at which base expands, depends on the rate at which the economy grows and also the acceptability of the expansions.
“As you can see, in expanding the base this year, we touched some nerves,” Jordan stated.
Last year, Government imposed VAT on private tuition fees, a move that attracted protest action and a petition against it. Government has indicated its willingness to review its decision and has engaged many groups.
“We have already said in the context of every budget, we always review every tax, and we only have a couple more days to determine whether the nerves would be calmed or not.”
The PPP/C did not participate in the Budget consultation process, but its Motion also seeks to reverse VAT on essential food items; electricity and water; pharmaceuticals and medical supplies; and all education goods and services.
The PPP/C Motion also wants to remove ‘burdensome taxes’ on the mining sector by reducing the contributors’ tax from 20 percent to the original 10 percent, and remove the two percent final tax paid by miners.
As it relates to fiscal policies, the PPP/C’s Motion seeks the reversal of the Bank of Guyana Cabinet-directed decision to licensed currency dealers, commercial banks and cambios, to limit the spread between the buying and selling rate of the U.S. dollar to no more than $3.
The PPP/C’s motion as submitted to the National Assembly, calls for the release to the public of the ExxonMobil agreement with Government. Also, some projects which the PPP/C had pursued during its years in Government are also stated in the motion to be restarted, including the Amaila Hydro Falls project.
In education, the motion calls for the restoration of the ‘cash care’ programme for each child registered from nursery through secondary, and an increase to $20,000 per child; restoration and increase of the school uniform vouchers to $4000 per child across the country; and the removal of VAT on education goods and services.