A team comprising experts from the International Monetary Fund (IMF) is due in Guyana next month to assess the Value Added Tax (VAT) and recommendations made by the Tax Reform Committee set up by the APNU + AFC government.
In an interview with the Government Information Agency (GINA), at the his Main Street, Georgetown, Office, Minister of Finance, Winston Jordan said, “notwithstanding what the Tax Reform Committee said, and notwithstanding the clamour for the reduction in VAT, I have asked the IMF and they have agreed and the team is to come in August to do an assessment of the Value Added Tax.”
Minister Jordan said, after they would have completed their assessment “we will take a look, and we will make a determination what reduction is feasible and when this reduction can take place.”
Minister of Finance, Winston Jordan
The Government in late 2015 had established the Tax Reform Committee headed by Dr. Maurice Odle. The committee’s mandate was to examine the country’s taxation system and make recommendations for fixing it.
The committee had reported its findings to the Minister of Finance in January 2016, a time described by the minister as too late to have the recommendations included in the 2016 budget.
However, “Notwithstanding that, we had anticipated some of the measures in the Tax Committee’s report and they were actually implemented in the 2016 budget,” the Minister said.
Among the recommendations of the Tax Reform Committee were an income tax threshold of $750,000 with progressive rates of taxation from 20% to 35%, reintroduction of estate duties and levies on tobacco and alcohol. In the last budget the income tax threshold was increased to $660,000 from $600,000. Meanwhile steps are underway to formulate a Bill for the control of tobacco.
Further, the Minister said the Guyana Revenue Authority (GRA) has been approached for its input on the recommended tax reforms.
“What I have caused GRA to do is to go through the report with a fine tooth comb, split it up into the various sections and come up with recommendations of the feasibility of some of what have been recommended so that we could have a discussion in Cabinet and make a determination, whether or not they get into the 2017 budget. The tax reform committee did recommendations that span two years …not just 2017.”
Among the recommendations of the Tax Reform Committee were a reduction of VAT from 16 percent to 14 percent, the introduction of an intermediate rate of seven percent, a reduction of the number of items on the VAT exempt list and a widening of the tax net by reducing the minimum taxable amount from $10M to $5M, Minister Jordan said.
Meanwhile President David Granger on an edition of the programme “the Public’s Interest” had said it was perhaps hasty on the part of the then opposition (APNU+AFC) to promise a reduction on the VAT rate during their first year in office when they had inadequate information on what they would find when they assumed office.