Following vigorous debate the National Assembly yesterday passed a bill amending the Value Added Tax Act to facilitate the Minister of Finance making changes to the list of zero-rated and exempt items and other areas.
Minister in the Ministry of Finance Jennifer Webster said that the bill seeks to amend Section 98 of the VAT Act. She said that though the amendment allows the Minister to make changes to Schedules 1 and 2, the arrangement will be transparent and would allow for the regulations to be made in a timely manner.
Government laid the bill in the National Assembly on Friday and attempted to take it through the House and pass it the same day. But objections from the Opposition benches saw Deputy Speaker Clarissa Riehl disallowing a Motion that would have suspended the Standing Orders and allow the bill to be passed.
With the debate on the VAT amendment bill concluding at around 5.30 yesterday afternoon, the Government MPs did not allow an amendment to the bill to be part of the legislation’s final cut.
The PNCR-1G, through its point man on finance and economic issues Winston Murray sought to amend the bill to bind the Government to only adding – and not deleting – items to the zero-rated and exempted list. But the Government rejected this proposed amendment on the grounds that it isn’t their intention to take items away from the list.
Murray said that the law as it stands does not allow the Minister to make regulations unless he goes to Parliament for affirmative resolution. According to Murray, giving the Minister of Finance carte blanche to amend Schedules 1 and 2 may give the Minister the opportunity to reduce the number of listed items on those schedules.
Webster re-emphasised that the Government has been closely monitoring the implementation of VAT, since it came into being, effectively on January 2, 2007.
She said that the Government held various consultations with members of the business community and the private sector and the Forest Products Assoc-iation among others.
“We have been able to make preliminary assessments,” she said, adding that the businesses which have been making an effort are to be commended.
But at the same time, she said that some businesses were indeed using the opportunity to increase their prices. Arguing for the bill, Webster said that there may be situations arising which require immediate action on the part of the Government. She said that that some flexibility was needed in the transition process and that this is not uncommon in countries where VAT has been implemented.
Murray said that the Minister of Finance Dr Ashni Singh (not in Parliament yesterday) had told him that the amendments contained in the Bill would have been coming to the National Assembly. He said that the Minister was very frank with him and that the consultation was welcomed. Murray said that in giving the Minister the party’s support he did so on the condition that the facility being given the Minister of Finance through the amendment would be used to add items to the list catered for in Schedules 1 and 2.
Murray said also that the Minister at that time told him that he would have been providing a list of the items that would have been considered in the amendment. But this list didn’t materialise, he said.
Making his contribution to the debate Manzoor Nadir, Commerce Minister and Leader of the TUF said that the Government “never said that VAT will reduce the cost of living.” He said that where grey areas exist in determining whether VAT is payable or not, the bill would serve well.
He said that the Government has noted the pluses and minuses of the VAT implementation and acknowledged that there is no justification in the large increases in prices at some businesses. He said that the Government is, however, to undertake a comprehensive review of the tax’s implementation and as such he questioned the wisdom of the Opposition seeking to fetter the hand of the administration in making regulations.
Nadir said that the Government has to work more closely with the business community and re-emphasised that the Government has committed itself to a comprehensive tax review and revenue neutrality.
Khemraj Ramjattan, of the Alliance for Change (AFC), said that the Government is creating a dangerous precedent in taking power away from the legislative process of the National Assembly and placing it in the hands of the Minister. He said that the AFC condemns this action on the part of the Government.
He said that though the Government is telling people that some 400-odd items have been brought down from consumption tax of 30 per cent to VAT at 16 per cent, 126 items went from zero per cent and five per cent tax to 16 per cent with VAT. Ramjattan said that the Government didn’t heed the warnings when they were sounded.
Dr Leslie Ramsammy, the Minister of Health, said that through the bill the Minister of Finance will be able to bring much needed relief to consumers and one of the expected measures is domestic air travel. “Y’all want to keep [Gerry] Gouveia quiet,” Opposition Leader Robert Corbin heckled – Gouveia being the owner of a local air service and of late critical of the way the VAT implementation has been handled.
Also bringing some light moments to the debate was the ever-animated Shaik Baksh, who said that the there had been some “ripples” in the VAT implementation. “Ripples? A Tsunami!” PNCR MP Debra Backer retorted.
Baksh chastised the PNCR-1G for leading the charge against the rushing of the bill through the Parliament on Friday. He said that if the bill had been passed then, the consumers of Guyana would have been reaping the benefits at this moment. But he said that the prices are stabilising. “People are now understanding the tax
