A team of International Monetary Fund (IMF) experts is expected in Guyana shortly to examine ways of reducing the 16 percent Value Added Tax (VAT) ahead of changes that might be announced in next year’s National Budget.
Finance Minister, Winston Jordan said a team from the IMF’s Barbados-based Caribbean Regional Technical Assistance Centre (CARTAC) would be going to Georgetown conduct an assessment as well as the quantitative work of Guyana’s Tax Reform Committee and make recommendations for the way forward on VAT.
“They are going to send a one or two-person mission to do a complete assessment of our VAT, where it is today including options for changes into the system so it is on the cards,” he said.
Jordan virtually ruled out VAT reductions during this year because of the need for public consultations about changes to that tax structure “that could cause trouble.” “It will be extremely difficult to just bring in a VAT reduction in the middle or the half of the year when our budget anyhow is not based on that,” he added.
The Finance Minister that as part of the process authorities would have to “bring into the mix,” for example, water and electricity services on which VAT is not currently paid. He stressed that government would have to include other goods and services to ensure that it does not lose revenue by only reducing VAT. “In doing the reduction, we will have to expand the base on which the VAT is being applied to recoup lost revenues from the reductions,” he said.
The governing A Partnership for National Unity+ Alliance For Change (APNU+ AFC) coalition had promised to reduce VAT during its 2015 general election campaign.
CARTAC is one of eight IMF Regional Technical Assistance Centers (RTACs) located around the world in the Pacific, the Caribbean, in Africa, the Middle East, and Central America. These Centres were created to help countries strengthen human and institutional capacity to design and implement sound macroeconomic policies that promote growth and reduce poverty.
The CARICOM Council of Ministers of Finance and Planning (COFAP) took the decision to establish the CARTAC in September 1999 and it became operational in November 2001