Updated: Environmental tax reintroduced; VAT to be paid on water, electricity; Old Age Pension increaesed

Last Updated on Monday, 28 November 2016, 18:50 by Denis Chabrol

by Derwayne Wills 

Guyanese will now have to pay Value Added Tax (VAT) on water and electricity consumption above a certain level, while the overall of Value Added Tax on businesses has been reduced to 14 percent on companies, Finance Minister Winston Jordan announced in the 2017 National Budget.

In a move that has left many puzzled, Finance Minister Winston Jordan in his Budget 2017 presentation has proposed the reduction of the Value Added Tax (VAT) from 16% to 14%. The Finance Minister has also proposed 14% VAT be added to electricity bills exceeding $10,000 monthly and water bills exceeding $1500 monthly.
Jordan’s announcement was met in the National Assembly by shouts of disagreement coming from the opposition benches, but the Minister maintained that the promise to alter the arrangements for VAT was “made in our Manifesto.”
“The hue and cry about VAT on electricity is just that,” Public Infrastructure Minister David Patterson told Demerara Waves Online.
Patterson anticipates that some 40% of persons within the lower income bracket would not be required to pay this increase, especially since “most of the vulnerable persons light bill does not reach $10,000 per month. Everybody knows that. It’s just a big hue and cry from the opposition.”
Minister Patterson, who has responsibility for the country’s energy sector, said there are initiatives to help persons from the lower income bracket whose light bill currently exceeds $10,000. Those include energy saver bulbes and assistance from the Guyana Energy Agency, he said.
Minister Patterson does not see this as an added financial burden for citizens since “VAT is being lowered to 14%. It is coming off of everything else. Alcohol beverages, food, and every other thing it is. The only thing it would be added to is electricity and water… All you have to do is conserve on electricity, conserve on water and that’s one of the greatest things. That’s not an imposition at all.”
Finance Minister Winston Jordan did propose “to expand the list of exempt items and eliminate all zero-rated items, with the exception of those pertaining to exports and manufacturing inputs.” That information will be provided in the estimates which will be released to the media tomorrow morning.
Opposition Leader Bharrat Jagdeo feels differently about the Finance Minister’s budget. Jagdeo, during a press conference after the budget, said removing the list of exempted items is not a decision that will help poorer people since food consumed on a daily basis could be VAT-able.
“If you are a lower income and 80 percent of the things I consume are zero rated,” Jagdeo explained, “now I have to pay on all those items 14% plus the electricity and the water, how does it help me? It affects poor people disproportionately.”

Jordan said local and foreign beverage companies would from January have to pay GYD$10 per unit (bottle or can). The law will be amended to create a level playing field for local and foreign companies in keeping with Caricom’s Treaty of Chaguaramas.

In the area of VAT on businesses, he said the threshold has been hike from GUY$10 million to GYD$15 million to reduce the burden on the Guyana Revenue Authority and target those that account for a large revenue earnings.

Meanwhile, Old Age Pensions have increased t0 GYD$19,000 and GYD$7,500 for monthly Public Assistance.

additional reporting by Denis Chabrol