While one manufacturer on the Essequibo Coast has cut production to cope with slumping sales, other businesses are hoping that the rice harvest will fuel a shopping spree.
In addition, VAT registered and unregistered hoteliers are complaining of a slump in bookings.
Meantime, consumers were asking for quotations more than buying at the Magbool Basir Gas Station at Charity River Dam.
Owner and manager Magbool Basir told this newspaper that consumers are shopping for diesel, gasoline and kerosene which are VAT exempt, but they are limiting their purchases of lubricants which are subject to VAT. For now, Basir said the business climate was ‘a little ruff’. This businessman said that he hopes the business climate picks-up following the reaping of the rice crop this month-end. Rice farmers on the southern end of the coast are expected to begin reaping shortly.
This gas station hired a new accountant who is based in Georgetown and was set to file the VAT return yesterday. According to Basir, the accounts at his gas station show that the output tax is greater than the input tax, hence the gas station has taxes to remit.
One chowmein manufacturer was forced to cut production amid low demand. Sam Baksh of Iman Bacchus and Sons Ltd at Affiance, Essequibo Coast said that the company had cut production by 25% owing to low demand. Baksh noted that he could not say whether the low demand was due to decreased consumer spending or if his customers were shopping elsewhere. But he is also watching closely the inflation rate since this will determine the prices of many consumer items. Currently, the business is not computing the tax electronically but is doing so manually, Baksh said, adding that the store is not likely to begin administering the tax electronically soon.
At present all the bill books are printed with the TIN number, business address and also have the VAT initials but the VAT amounts along with the quantity of the items are written on the bills.
$3M to
implement VAT
Baksh estimated that the business will spend $3M this year on the implementation of VAT.
“Very quarrelsome,” were the two words he used to describe his customers’ response to the tax. He, too, complained that the c-tax paid last year and the VAT paid in January are within the cost of some items and although he has tried to bear some of the cost the business will not be able to cope with all. For example, he mentioned that the store had paid almost a million dollars in VAT on soap power and margarine in January, but over a week ago the Finance Ministry zero-rated these two items. Nevertheless, this manufacturer plans to file a VAT return before the deadline.
Manager Eleanor Samuels of Arabian Atlantic Hotel at 44 Henrietta Village, told Stabroek News that so far their guests have not complained about the new tax, noting that the hotel had not experienced problems implementing the tax. However, Arabian has seen a decrease in bookings and the manager opined that persons may be choosing to book rooms at hotels not charging VAT. Previously the Hotel Accommodation Tax was 10% but 16% VAT is now charged. Samuels said that she has received some assistance from the GRA office in Essequibo and in Georgetown and believes that she will be able to meet the February 21 deadline.
The owner of a hotel who asked not to be named told Stabroek News that, “business is very slow.” This hotel is not registered to charge VAT and the owner explained that the hotel did not reach the $10M threshold and was not seeking voluntary registration.
He complained that food prices have increased and even places not registered to charge VAT have hiked their prices. Some business places, he said, are also hoarding items, creating artificial shortages to keep prices up.
Fifteen-room
hotel empty
When this newspaper spoke with this hotelier this week he had no guests in his 15-room hotel. Normally merchants selling on the coast overnight at this hotel, but tourist bookings are few.
The owner of a general store told Stabroek News that the store is registered to charge VAT but the consumer “feedback is really, really poor… many times (I) have to cancel bills.” This store owner told this newspaper that most consumers would agree to pay the VAT exclusive price for the item but not the VAT inclusive price. The “customers are so mad about it (VAT),” said the businesswoman, noting that regular shoppers are now choosing corner stores that do not charge VAT. “It really isn’t working out and it is so unfair to business people.” Even as consumers demand lower prices, this store owner lamented that her business is unable to sell much lower since the mark-up is small. It was also mentioned that the VAT seems to be putting consumers against businesses. This businesswoman would like to see a published list of all the items that previously attracted no c-tax or c-tax at the rate of 10%.
She also argued that queries to the GRA did not elicit much help. This business place is not computerized and all accounts are done manually, and the proprietor complained that the work load is so much “it is really not working.” She said also that the accounting process is strenuous, even with a contracted accountant based in Georgetown.
Already, her profit margin has gone down, this entrepreneur lamented, as the additional cost of billing mounts. Making the VAT return deadline of February 21 will also be difficult, the store owner acknowledged, owing to the workload. The proprietor also noted that she is a single parent with three children and over the past week has spent little time with her children since her mornings begin at 5 am and the day ends late at night. She also noted that with the decreasing profit she is unable to increase her employees’ salaries to cope with the hike in market prices.