By Jomo Paul
[www.inewsguyana.com] – Cognizant of its inability to introduce a phased reduction of Value Added Tax (VAT), the APNU+AFC administration has named a slew of household items that will now be exempt from the 16% tax.
Finance Minister Winston Jordan during the Budget speech listed the new items on the VAT exempt list, which includes yogurt, cereals, fresh carrots, Milo and Ovaltine, Nestum, Mustard and Mayonnaise, locally-produced fruit juice, locally-made Chowmein, Vinegar, locally-made uncooked Pasta, Ketchup, Chicken Sausages in packets, locally-produced Chinese Sauce, Baking Powder, Liquid Detergent, household cleaning agents, rolls of paper towels, liquid detergent, household cleaning agent, and computer printers for non-commercial use.
Jordan said it is hoped that retailers will pass on the benefit from the removal of VAT from these items to the consumers, through the lowering of their prices.
He noted too that the estimated loss of revenue is $680 million. Explaining the decision not to reduce taxes, Jordan noted that over the past three months, the new government had to come to grips with the reality that Guyana has a flawed tax regime that would need to be corrected before any tax reforms are done.
Jordan indicated that the tax system is characterized by high tax rates, a higher level of requests for tax exemptions and concessions, “which totalled $55 billion in 2014; an unacceptable level of tax evasion that is clearly unlawful, discriminatory and stifles competition; widespread discretionary elements, which have been used to favour and reward friends, rather than encourage development; and low and/or no compliance.”