Reinstatement of 40 percent tariff on soaps in keeping with a regional ruling on trade - Govt

Reinstatement of 40 percent tariff on soaps in keeping with a regional ruling on trade – Govt

May 30, 2021 News

– Govt. Opposition criticism misleading

Opposition Leader, Joseph Harmon.

Kaieteur News – In response to criticisms from the Opposition over the reinstatement of 40 percent Common External Tariff (CET) on all soaps, the Ministry of Finance (MoF) last Wednesday issued a statement explaining that the decision to restore the tax is in keeping with a 2018 ruling of the Caribbean Community’s (CARICOM) Council for Trade and Economic Development (COTED) on the matter.
Further, the Ministry called the Opposition’s criticism misleading given that it is well aware of the issue as the decision was taken while the Opposition was still in government.

Senior Minister within the Office of the President with responsibility for Finance, Ashni Singh.

On Wednesday, the Guyana Revenue Authority (GRA) published a notice outlining the move to reintroduce 40 percent CET on all extra-regional soaps. The announcement sparked criticism from the A Partnership for National Unity +Alliance For Change (APNU+AFC) coalition with Opposition Leader, Joseph Harmon, calling the Government’s decision unconscionable and unfair to Guyanese who are faced with economic hardships due to the pandemic.
Taking into account the statement of the APNU+AFC, the Government through the MoF pointed to the long history behind the re-imposition of the CET. According to the MoF release, “the APNU+AFC is well aware of the history of this matter and they had themselves already started to take action to reinstate the CET before they got busy trying to steal the 2020 election.”
“Despite being in full possession of the facts surrounding this matter, they have chosen once again to follow the route of trying to mislead their rapidly dwindling number of supporters with a completely contrived and fanciful misrepresentation of this matter,” the Ministry said.
In explaining the issue, the Ministry noted that Dominica – a CARICOM Member State and the largest producer of soaps in the Region, had filed an official complaint at COTED against a number of other member States which were applying rates of duty on extra-regional soap less than the prescribed CET rate of 40 percent. Guyana was amongst those countries, given that we were charging at the time a rate of 20 percent.
The Ministry said that as a result COTED ruled on the matter and directed that all such member States, which were in violation of the CET, should reinstate the 40 percent.
Following the 2018 ruling by COTED, the Finance Ministry said the then APNU+AFC Government started to take steps to implement the reinstatement of the CET, including drafting the required legal instruments.
“However,” the MoF said, “they did not proceed to finalise these, presumably because they were more preoccupied with trying to find a way to hold on to office illegally and preparing plans to rig the upcoming 2020 election.”
Additionally, shortly after the onset of COVID-19, the Ministry noted that the APNU+AFC Administration proceeded to lower the rate of duty charged by Guyana from 20 to 0 percent, which further exacerbated the CET violation.
“Furthermore, they did so without invoking emergency procedures through the appropriate COTED channels, which might have been used to regularise the matter. Instead, they acted with similar arbitrariness and highhandedness which characterised their entire five years of misrule,” the statement outlined.
Since then, the release added, Dominica has continued to pursue the matter bilaterally and has suffered severe economic consequences as a result of the CET violation. Further, it said that Dominica and Guyana share an important trading relationship. The release explained that Guyana is one of Dominica’s main export markets for soaps, accounting for approximately 42 percent of Dominica’s exports while Dominica sources 75 percent of its total rice imports and 32 percent of its total imports of sugar from Guyana.
As such, the Ministry said that Guyana’s failure to respect COTED’s 2018 ruling on this matter exposed the country to legal action by Dominica and other regional producers of soap through the Caribbean Court of Justice (CCJ) and could result in very substantial damages being awarded against Guyana which would in turn result in a significant cost to the public treasury.
The Ministry emphasised therefore, that the action taken is consistent with the current Government’s respect for the rule of law, the CET being a legally binding regional obligation.
“This action is also consistent with Guyana’s solidarity with our brothers and sisters in Dominica for whom soap manufacturing is a major industry, a major employer and a major source of foreign exchange. In exactly the same manner, Guyana would not wish for any other CARICOM Member State to violate the CET as it relates to any of the goods we produce and can export to the region,” the statement added.