Revenue to be collected from the newly instituted Value Added Tax (VAT) on data, water and electricity is expected to bring in close to $3 billion next year, Commissioner General of the Guyana Revenue Authority Godfrey Statia has said.
“There will be increases on water and electricity, we know that for sure… VAT on electricity would probably give us about $1.25 billion and on water about $315 million, just about that… the VAT on data, if you look at the figures given by E-networks and GTT, would be just around $1.4 billion,” Statia replied, when asked by Stabroek News for projected figures.
“The overall increase when you look at all of that would be, even if you take out the losses and all those other things, would be just about $4.5 billion, and that will be wiped out by the other tax concession that you would have been giving,” Statia stated in an overview of the figure changes.
During his presentation of the proposed 2017 National Budget, Finance Minister Winston Jordan reported that in 2017, tax revenue is expected to increase by 8.9% to $162.6 billion, “reflecting a considerable increase in collections of VAT,” due to the measures to be implemented next year.
Government, through the Department of Public Information, has claimed that new tax measures announced by Jordan would see the injection of $9.595 billion into the economy.
“This represents the amount which the government will forego from the national treasury and is in effect, a massive stimulus package,” Director of Public Information Imran Khan asserted in a statement.
Khan’s statement noted that the planned reduction of VAT from 16% to 14%, alone will dent the national treasury by $4.8 billion, while the loss from the reduction in personal income tax would cost another $3.8 billion.
Citing figures provided by the Ministry of Finance, Khan noted that the VAT reduction from 16% to 14% would cost the treasury $4.817 billion; the reduction of the personal income tax from 30% to 28% would cost $3.826 billion; the reduction in corporate tax from 30% to 27.5% would cost $752 million, while the increasing of the VAT threshold from $10 million to $15 million would cost $200 million.
But Opposition Leader Bharrat Jagdeo believes that the figures are being downplayed by government and has accused the government of trying to play down the “humongous tax burdens” that the proposed 2017 National Budget would place on citizens, while estimating that the measures would net an increase of roughly $25 billion in VAT alone.
Jagdeo dubbed Khan’s statement as, a “lopsided and self-serving piece of propaganda,” that omits to calculate the windfall in revenue that VAT will generate, once it becomes applicable to utilities and services, on which the government is seeking to apply the tax.
“It is nothing more than a pathetic attempt to justify and defend the humongous tax burdens that this budget places upon the back of every single Guyanese, whether in the public, or private sector,” Jagdeo said.
Government has been heavily criticized for its move to implement not only the 14% tax on power consumed over $10,000, but also on water charges over $1,500.
The opposition PPP/C, the Private Sector Commission (PSC) and other bodies and persons have called on government to reconsider proposed changes to the VAT regime, with the PSC warning that they would hurt the business community by driving up costs and forcing higher prices on consumers.
The PSC has said that it could not endorse the changes in the VAT regime as they would have several negative impacts on the business community and explained that the application of the new 14% VAT to the consumption of electricity and water, is a “big blow to small businesses.”
