Towards the end of 2006 as public debate raged over the imminent implementation of the Value Added Tax President Jagdeo declared that government would be seeking toke measures to cushion any ensuing rise in the cost if living particularly in terms of its impact on the economically disadvantaged section of the population.
Since the implementation of VAT in January of this year the administration has had to intervene to zero rate additional consumer items in the wake of the steep price increases that came in its wake. And throughout the year there has been manifest evidence that price rises resulting from the VAT rate have not been compensated for either by the zero rating measure or by the removal of the various other taxes that were dispensed with in the wake of VAT. The result has been that the government has had to fight off the resentment of both the political opposition and the various consumer groups and business organizations, all of which have been adamant that the VAT rate should be lowered from the prevailing16 per cent.
Most of the murmuring particularly from the private sector has been muted, a clear indication that businesses were far from keen to engage government in a fight over VAT. Towards the middle of the year a private sector position appeared to have emerged that it was best to await the half yearly review which was expected to include a disclosure on VAT revenue for January to June this year before making a comprehensive pronouncement.
Now that the review has been made public it transpires that VAT revenue for the first half of 2007 amounts more than 68 per cent of the anticipated takings for the entire year. The focus on collection of the tax which has been a preoccupation of the Guyana Revenue Authority appears to have worked.
President Jagdeo has been quick to ‘head off’ critics of the high VAT rate by announcing that pensioners and lowly paid workers will benefit from the VAT returns announced by the Finance Minister though his pronouncement has included no details on the form that these benefits will take. Perhaps, by disclosing that the beneficiaries will include workers who are “at the bottom of the scale” the President may be dropping a hint that the lowest categories of public servants may benefit beyond the promised 9 per cent salary increase which, in the circumstances, is generally considered to be decidedly inadequate.
Whatever measures are taken to bring relief to the most disadvantaged section of the population, these must surely include measures to address the onerous burden of rising food prices. Apart from the effects of VAT on the prices of some food items, rising global food prices have impacted on the prices of imported foods in general as well as on imports associated with the production of some locally produced foods. Chicken, which is part of the staple diet of many Guyanese is perhaps the best example.
Then, of course, there is the additional headache of high electricity tariffs and high petrol prices and the attendant increase in transportation costs all of which place additional strain on what in many cases are meager wages.
Another disadvantaged section of the population that is cleatly deserving are the growing throngs of unemployed persons who must also grapple as best they can with the cost of living. The promised relief must also take account of the need to pursue some level of job creation that can at least bring a measure of financial relief to the unemployed.
The President must therefore surely be aware that this has been a difficult year for Guyanese and that the promised measures to address the escalating cost of living must be more than costmetic and must be implemented with a minimum of delay.