Dear Editor,
We are writing in response to a letter published in Stabroek News, April 5, 2012 (‘A reduction in VAT would not benefit those earning below $40,000 per month…’) written by Mr Khurshid Sattaur, Commissioner General, Guyana Revenue Authority, whose main point was that a reduction in the VAT rate would not benefit “the average Guyanese” because “electricity, cooking gas, bread and flour” along with 100 items commonly referred to as the basket of goods that are usually consumed by “the average Guyanese” are zero-rated.
We presume that by “the average Guyanese” Mr Sattaur means people like us, poor people.
We want to point out to Mr Sattaur that even with the zero-rated items he mentioned, “average Guyanese” are feeling the squeeze of the 16% VAT. Those items are not the only basic things that poor people need. There are other basic food items that poor people use which also attract VAT. For example, at the cheapest price, one pack of chowmein costs $167 +VAT which is $26.72 extra; one pack of macaroni costs $150 + VAT which is $24 extra; and one 85g packet of curry powder costs $92 + VAT which is $14.72 extra.
But we do not only need food. We need to iron our clothes and a cheap iron costs $1995 +16% VAT, which is $319 extra. We need to cook, and a small four-burner gas stove costs $36,000 + VAT which is $5760 extra. We need to store our
vegetables and meats, and a small fridge, 5.3cubic ft in size, costs $59,999 + VAT which is $9,600 extra. We need a bed to sleep on, and a single bed costs $15,960 +VAT which is $2,554 extra, and a double bed costs $38,640 + VAT which is $6,182 extra. We need light, and the energy saver bulb which we want to use to save money costs $365 +VAT which is $58 extra. The telephone bill also attracts VAT.
Most of those extra costs look small, but only to those whose incomes are large. Imagine a single mother on public assistance who gets $5900 since the 2012 budget, needing a kerosene stove at the cost of $ 1512 +VAT which is$288 extra, and three energy saver bulbs at the cost of $1,095 plus a total of $174 extra for VAT. Because of the 16% VAT she would need to find an extra $62 more than the new increase in public assistance. And that’s for the single mother in town. There are many in the country and in the interior as well.
As for the old age pension and its increase to $8100, all the arguments from government spokesmen that the old age pension was never meant as more than a top-up, and that when you’re counting the old age pension you have to add the “social benefits” like health care and water, won’t help pensioners when they go into the shop with their $8100 a month which is $270 a day. The shopkeeper wants cash which they don’t have. Red Thread has proposed it before: for 3 months ask the Minister of Finance and the parliamentarians who speak the loudest in favour of these starvation increases to live on public assistance or the old age pension, with benefits, and see if they survive.
Mr Sattaur cannot say that a VAT rate reduction would not benefit us unless, of course, his argument is that poor people shouldn’t have basic things like an iron, a stove, a bed or a fridge.
As poor women, we are very careful to shop around because for us, every dollar counts and we can’t afford to spend what we don’t have. We may not know the technical arguments the big ones put forward regarding the benefits of VAT, but what we do know is that we, “average Guyanese,” are affected by VAT, contrary to what Mr Sattaur said, and we want a reduction.
Yours faithfully,
Joy Nicola Marcus
Joycelyn Bacchus
Halima Khan
Red Thread
