Letter: Govt’s need for revenue no excuse for 14% VAT on education

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Dear Editor,

The Minister of Finance and the President have recently informed the public of their decision to continue taxing private education. The Minister of Finance has also given a number of economic reasons why he will continue to tax such a crucial service despite more than 2% percent of the population signing a petition for the removal of this VAT on private  education. It is truly heart breaking that the Minister has only looked at the economics behind this tax.

Editor, economics is surely no justification for such an action.

In any tax, on any good/service  there is what any economist  knows as deadweight loss. This is the revenue that goes neither to the government nor to the suppliers (in this case, private schools).

This revenue is essentially lost to the entire economy. In the case of education, these losses are those students who will no longer be able to afford the private fees. Those nursery, primary and secondary students that now have to forfeit their quality education for crowded classrooms, less attention and less teaching.

Those tertiary (university) students that have to forfeit their quality education for, in some cases, the University of Guyana but for those courses that the University of Guyana does not offer, they forfeit their quality education for no education at all.

None of the responses I have seen in the media,  addressed the issue of the 1,300 ABE students who simply have nowhere else to go. Only three private schools in Guyana offer these internationally accredited courses. It should be noted too, that they each offer these courses at about 35% of the fee charged for the exact programme in neighbouring Trinidad and Tobago.

The Government’s need for revenue (350million short term dollars) is no excuse, no justification, no equivalency for those that will have to stop their education, drop out and swell the ranks of the unemployed in our country.

Even if three students were to drop out because of this tax (especially at the tertiary level where they have no other option), is that not a loss to this country?   One of those students could be the next great entrepreneur. The second could be the next Chief Justice. The third could even be the next President. Our estimate, based on persons who have come into Nations, is that the figure is not three persons, it could easily be 50 times than number.  Disregarding all their futures for 350 million is a loss of incalculable potential, and such a terrible loss of human resources to this country.

It must however be acknowledged, that with education people will try their best to make ends meet so that they can afford the tax, therefore, in the view of the Minister of Finance, there may not be a drastic drop out rate.

Even if they can do their best to make ends meet, can you imagine the extra hardship for a single parent (just wanting the best for their child) to have to pay  14% more? Can you also imagine the extra hardship for a nuclear family (dreaming of a greater future) to afford the tax for their three children (i.e. 14+14+14= 42%)? Can you imagine the extra hardship for a  mother doing odd jobs to pay for her own  education to escape from the depths of her own poverty with an ABE degree while providing for her one, maybe two, maybe three children?  So, even though we might not see the effects in the drop-out rate, it will be there, burdened on our fellow Guyanese. We are a determined people.

We will do what it takes to move ourselves and this country forward but that is no reason for the TAX to be considered affordable and to be a considerable additional burden on our already hard working people.

Where is the humanity and empathy when considering this tax?

The Minister said that only 8/57 private schools are tax complaint. Many of us fail to understand the relevance of that argument in this emotive debate. How is this non-compliance relevant to the students that have to suffer from the imposition of the 14%VAT? Must the people pay for the sins of others?  Must the compliant schools also pay for the sins of the non-compliant?  It is said that certain private schools are not paying tax. So, we the people must now reach deeper into our shallow pockets to suffice for their negligence? Where is the justice in this?

Let the Guyana Revenue Authority (GRA) do their job and investigate the true nature of these private institutions. Get them to pay their taxes and then you will not need to tax the other private schools and its students who already pay millions in taxes, any further.

The Minister said that the private schools “should” absorb the tax. If the true intentions of the tax were to be on the private schools and not the people, then the Minister should have increased their business taxes. It is totally illogical to apply a tax, a burden, to the people in the hopes that the school will, out of their giving hearts, absorb this tax.

It should have never been done in the first place, not in this manner. VAT is a consumption tax. It is clear then that it is a tax on the people. The Minister’s recommendation is further questionable when you consider that education is a merit good. It’s production can only have positive side effects for this country. Having the supplier (private schools) bear some of the burden is still a crime to human development because when the private system grows it provides opportunities. Opportunities for you, your relatives and me.

A tax restricts how much they can grow not only for their own benefit but their success only means success for our country. Is the Minister trying to stop the growth and development of these institutions?  Is the Minister trying to make the public system the only option to the people? Do we want a society like North Korea? One would think that we live in a free country, one that encourages growth. Are we as a people trying to move back to the socialist days? Allow the private schools to continue giving and growing their contribution to our country.

If the Minister wants more people in the public system then after he receives his loan from the World Bank he can develop the public system to a state where he will not need to force the hands of the people into the public system but rather encourage them.

When the day comes that classrooms are not over crowded, when  the day comes that our children are guaranteed quality education and when the day  comes that teachers are all qualified, better paid and abundant then and only then will parents allow their children to return to the public system. Until then they will make other choices.

The Minister said that VAT is a fiscal tool and not a cure for social ills. I most certainly agree with him. VAT is not a cure for social ills because (especially in the case of  Education) it is the mother, the creator and the instigator of social ills itself.

All in all, it is time we take a closer look at the humane side of this tax. We all have a right to quality education, please do not let  that be violated by this tax. Please do not let the expansion of education  be restricted in our country by this tax. Please do not let 350 million short term dollars be worth more than the futures of our citizens.

Yours faithfully
Othniel Lewis
Chairman, Nations 6th Form Council

 

 

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