Private schools have not been fulfilling their tax and National Insurance Scheme (NIS) obligations.
Minister of Finance, Winston Jordan, at a media conference today, said that only 57 percent of all private schools were registered with the Guyana Revenue Authority (GRA). Of these, only 20 percent are recognised and registered with the Ministry of Education.
Finance Minister Winston Jordan, addressing the media on VAT issue and private schools’ fees
Jordan said 10 percent of private schools are registered as Non-Governmental Organisations (NGOs) or Not for Profit while 14 are registered as profit making organisations.
According to Jordan, many private schools are not tax compliant as they do not submit tax returns for their employees.
The Minister said many schools seek to contract their employees and hence they are responsible for the remission of Pay As You Earn (PAYE) and NIS payments. “They don’t file returns. They don’t submit employers’ returns. They don’t submit income tax returns for the business and they don’t file property tax returns for the business,” the minister told the media.
He reminded that even if registered as an NGO, under the law, annual tax returns must be filed. “You’re exempt from paying property taxes but you’re not exempt from filing,” Jordan explained. He indicated that the GRA will enforce the full gamut of the tax laws.
The Minister reiterated that the decision of the government was based on the need to widen the tax base by ensuring that all persons who were supposed to, paid their fair share of taxes. Once this is achieved, the Government will be able to reduce the rate of taxes paid, overall by citizens, Jordan said.
The minister called the press conference at the Ministry of Finance to explain Government’s rational for implementing a 14 percent Value Added Tax on private tuition. The tax had resulted in public outcry including from persons who head private learning institutions.
Jordan said the discovery of non-compliance by some private schools was discovered after the calls to reexamine the decision made by the Government. Some of these criticisms cited the possible effects on low-income or poorer students attending private schools. “It is clear that private schools can find creative ways to dampen the effect of the VAT on tuition fees,” Jordan said.
He noted that any additional cost can be absorbed or subsidised in various ways.
Jordan noted that the government has set aside $4.3 billion or 17 percent of the 2017 National Budget for the education sector.
The fact the many private schools only cater for the nursery and primary levels was also noted by Minister Jordan. Most of these students, he explained, continue their education in the public school system, whether at high schools or at the University of Guyana which are state funded.
He reminded that the majority of teachers in the private schools also benefit from training via the government.
The Minister reminded that locally there is no barrier to education and each choice, whether public or private funded has unique consequences, the Minister noted.
The call to remove the VAT on tuition fees would result in a loss of around $350M and could result in an upturn of the Government’s Economic Programme and attendant consequences or a continuation of adjustments as seen fit to benefit all citizens, the Finance Minister noted.