President David Granger has called the elections promise by the APNU+AFC to reduce Value Added Tax (VAT) within its first 100 days in office “imprudent.”
Asked on this week’s “The Public Interest” programme if his coalition’s promise of a reduction in VAT was no more than an election gimmick, Granger said that while it is still possible that VAT will be reduced, it has not happened yet because the money is not there.
“When we got into government things were not as we expected. We had to find about $10 billion to bail out GuySuCo alone. It is a major problem. There are other areas that we need to provide funds for. We have not been able to reduce VAT…. It is not as easy as it looks. Perhaps it might have been imprudent to [make] a commitment at that point in time. I would say, philosophically, it is something we can achieve but not now,” Granger said.
APNU+AFC, in its elections manifesto, had promised a reduction in VAT within its first 100 days in office. Many have expressed disappointment that this promise has not been honoured.
Minister of Finance Winston Jordan had said in May that government had sought guidance from the International Monetary Fund (IMF) to ensure that the right decision was being made, even though the Tax Reform Committee (TRC) had in January, proposed that the tax be lowered from 16% to 14% along with the introduction of an intermediate rate of 7%.
Jordan had added that the TRC did some good work but given the government’s concerns about the implications of reducing VAT, it asked the IMF, through the Caribbean Regional Technical Assistance Centre, to send a mission to do a complete assessment of Guyana’s VAT system, including where it is today and the options for changes.
He had also stressed that changes would not be made before the 2017 budget, which is expected to be presented this December, even as he reiterated that a VAT reduction in terms of rate “would not just come with that… We [would] have to expand the base on which the VAT is applied so as to recoup lost revenues for the reduction.”
