Category: Taxation

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Some of the recommendations from the Tax Reform Committee could be considered for the 2018 Budget

A small but significant correction arises out of the article ‘Ram blasts bad spending by “big” gov’t’ (SN, October 13, 2017). I recall questioning a reported remark by Mr Winston Jordan, Minister of Finance, about no new taxes but expressed offence at his assertion on the taxes introduced by reference to a game of cards. In fact, this is what he said: “I’ve never introduced a new tax… they were all the same tax. All we were doing is playing cards … we were shuffling them around and so forth”. I took offence for two reasons. Taxation constitutes a deprivation of property, albeit a legitimate one, and no one, let alone the man in charge of taxation policy, should treat it with flippancy.

The second is that it suggests that the work of the Tax Reform Committee (TRC) had no useful purpose. The committee was made up of two accountants (Godfrey Statia, Christopher Ram) and two economists (Drs Maurice Odle and Thomas Singh) with outstanding support from two officials from the Ministry of Finance. Given the demanding deadline set by the Minister, the work was done mainly at weekends and resulted in a 133 page report of six sections and an Introduction and Executive Summary. Even by the narrowest of measures, there were ninety-six specific recommendations.

I am not aware that the Report has been released to the public but that references to the committee rather than the Report have been made in relation to VAT on water and electricity. When the committee sat and argued in the boardroom of Ram & McRae about taxation and poverty alleviation, income inequality, wealth disparity, egregious evasion and administrative corruption, we did so as professionals interested in providing the tax aspect of fiscal policy and public administration as tools for economic and social development. On water, I recall arguing that if I want to enjoy the luxury of a swimming pool then there is no reason why the water I use should be free of VAT, while many items of necessity used by lower income persons are taxed. Continue reading “Some of the recommendations from the Tax Reform Committee could be considered for the 2018 Budget”

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PPP/C recklessly ignored 12 COTED warnings that environmental tax violated treaty

Mr Anil Nandlall, former Attorney General, berates the government for not settling its environmental tax case with SM Jaleel and its subsidiary Guyana Beverage Inc, a decision on which was handed down by the CCJ on May 9. Had Mr Nandlall disclosed that the root of the problem was the PPP’s failure to withdraw the 1997 tax which became unlawful on the coming into force of the Revised Treaty of Chagauramas in 2001, his letter would have had more credibility. In fact, the PPP recklessly ignored twelve warnings from the Council of Trade and Economic Development (COTED) of Caricom between May 22, 2001 and March 30, 2012, that the tax was a violation of the Revised Treaty of Chagauramas (RTC). Mr Nandlall places the blame on APNU and the AFC for their failure to support an amendment in 2013 but does not state why the PPP/C did not use its majority prior to 2011 to amend the legislation, or why it did not simply stop collecting the tax after it lost its parliamentary majority, as the CCJ pointed out.

It is also important to recall that Mr Nandlall himself argued the similar case brought by RUDISA against the government but failed to raise important points of law, one of which the CCJ indicated would have been an attractive proposition. The CCJ ruled in its entirety against Guyana in RUDISA which was awarded judgment for the full sum of US$6,047,244 they claimed. In the SM Jaleel case, the claim against Guyana was for $2,277 million for the period January 2006 to August 7, 2015. The CCJ ruled, however, that only $1,178 million collected between May 7, 2011 and August 7, 2015 must be refunded. That works out at approximately 52% and after tax adjustment to approximately $700 million.

I believe that Mr Basil Williams was right in taking the case to the CCJ and that Guyana has reason to consider that the ruling was particularly harsh against it. In fact, had the CCJ not rejected two applications by Guyana for reasons that are highly debatable, Guyana would have fared much better. The applications were to produce expert evidence from Dr Maurice Odle and me, and the second a request for documents. Continue reading “PPP/C recklessly ignored 12 COTED warnings that environmental tax violated treaty”

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Government applied different standards to VAT on medical services from those on education services

Clearly unmoved by fifteen thousand signatories and the heartfelt arguments, pleas and entreaties of hundreds of parents and students at the Government-Parents-Adminis-trators VAT on Education consultation, Cabinet’s subsequent announcement of no review of VAT on education until 2018 has effectively killed any further meaningful discussion on this issue. In this my last contribution to the debate, I write only to show how the government has applied vastly different standards to VAT on medical services and education services, and more particularly private education services.

In his Budget 2017 Speech, the Finance Minister announced proposals to “expand the list of exempt items and [to] eliminate all zero-rated items, with the exception of those pertaining to exports and manufacturing inputs.” In neither list of exempt nor zero-rated items attached to the Budget Speech did education or health services appear, meaning that those items, both of which were previously zero-rated, would become taxable. The doctors at a meeting at the Ocean View Hotel protested and lo and behold, when the actual law was published, not only did health services mysteriously appear in the exempt list (Schedule II), but whole ranges of medical supplies appeared on the zero-rated list (Schedule I). Continue reading “Government applied different standards to VAT on medical services from those on education services”

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The case for VAT on education is weak to non-existent

The decision by Dr Rupert Roopnaraine, Minister of Education, to meet five parents and Swami Aksharananda, educator, as representatives of the group protesting outside of his ministry against VAT on education services on April 5 was commendable. Coming on top of the Cabinet decision to hold a consultation with the public at the National Cultural Centre today Friday, April 7 at 11 am, there is some hope that the government is finally ready to reverse the decision to impose VAT on education.

Why it has taken the government over four months to do the right thing is baffling. Almost every argument by the government has been met with cogent, rational and compelling responses. Here are some of those arguments and the responses. Continue reading “The case for VAT on education is weak to non-existent”

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PPP/C’s Income Tax Act amendment is also unconstitutional

The Stabroek News of Friday January 6, 2017, reported that two parliamentary representatives of the PPP/C criticised but abstained from voting on an amendment to the Value-Added Tax giving the Commissioner General the right to prevent persons, through the Chief Immigration Officer, from leaving the country once they owed VAT.

And in the letter columns of the Stabroek News of January 7, former Attorney General, Mr Anil Nandlall returns to the issue with a reasoned argument whether the amendment violates the Constitution and is therefore void (‘Section 45 of the VAT Act is unconstitutional’).

This is interesting because in 1993 then PPP/C Finance Minister, Mr Asgar Ally inserted by way of an amendment to section 71 of the Income Tax Act a new provision that is arguably more dangerous than the APNU+AFC’s amended VAT provision. Taking Mr Nandlall’s argument, it means that the PPP/C’s amendment to the Income Tax Act is, at best, on the same tenuous constitutional ground as the APNU+AFC’s amendment to the VAT legislation.