…gov’t still committed to easing 14% VAT application

PRESIDENT David Granger on Wednesday said that the 14 per cent Value Added Tax (VAT) on private institutions will not be removed. The President was at the time responding to questions posed by journalist, Gordon Moseley following the launch of the Department of Environment.

“As it is now the tax stays…but there is more in the mortar than the pestle,” said President Granger in response to whether Government will heed the petition lodged by parents and several private institutions. As of February 1, 2017, private education institutions are required to pay a 14 per cent VAT as a result of the removal of zero-rated items in the 2017 budget.
He explained that at a ministerial confab held at State House on Tuesday, Minister of Finance,Winston Jordan,presented a gloomy situation of private schools evading the tax system. He said there are approximately 57 private institutions in the country and of that total there are only eight that are compliant.
‘There are very strong arguments to maintain the tax. Cabinet examined it and I’ll urge the Minister of Finance to make a statement so the issues are very clear and understood,” said the Head of State.
President Granger noted that private schools are not all the same but cautioned that Minister Jordan was in a better position to elaborate on the matter while emphasising that it is not his administration’s intention to place an additional and unnecessary burden on parents and students.
“There is tremendous sympathy for the families and students but as I said…there are grounds for ensuring there is better compliance by all private operators with the GRA’s regulations…right now we have a high level of non-compliance by private entities,” he stated.
The President was quick to point out that government is not at all attempting to pressure private entities but noted that all Guyanese must pay their fair share of taxes.
“The Finance Minister is going to make a statement… the finance minister will explain certain aspects of taxation that were not clear to the public before,” President Granger added.
Last week,Cabinet Secretary and Minister of State,Joseph Harmon,indicated that the petition against the implementation of VAT on education was engaging the attention of Cabinet. Harmon noted that many of the private schools are operating as “Charter Schools” and as a result do not pay taxes.
Guyana Chronicle understands that many of the private schools, 33 of which operate within Georgetown,are unrecognised. According to information received, of the 33 schools in Georgetown,21 are unrecognised while 12 are. This represents a major problem for the Ministry of Education and by virtue the Guyana Revenue Authority.
The source said, “it is not the intention of government to place a burden on the parents of children attending these private schools but the truth is many of these schools are evading the tax system… these schools are registered as non-profit institutions.”
Following the announcement of the 14 per cent VAT on education by the Finance Minister during his reading of the 2017 budget last year, there has been a public outcry on the implementation of same. But Jordan in his argument noted that if parents can afford to enroll their children at private institutions they can well afford to pay 14 per cent tax on the tuition.
In an interview in another section of the media recently, the Finance Minister was quoted as saying, “While the earnings from VAT can be used to address social ills; it is a fiscal tool. Our Education Act says that we want to make sure people are not denied education and educational opportunities in Guyana. There is a wide range of education opportunities provided at both the state level and at the private level, the choice is always at the user to determine whether to use public or private.”
Jordan said too that “VAT is not a cure for social ills; it is first and foremost a fiscal tool. I said we are aiming to reduce VAT but in doing so we will seek to broaden the base as wide as possible. There is no VAT on public education; it remains a choice of the parent. Government is not making that choice for them.”
Meanwhile, Director of School of the Nations, Dr Brian O’Toole, began a petition against the implementation of the tax. O’Toole,in a letter to the editor, warned that the move by the APNU+AFC administration can cause hardship to those who are already disadvantaged and are attending his institution.
“For those who come to Nations daily in luxury cars,this new additional tax is an annoyance,but to the 16-year-old school leavers who are part of the 800+ ABE cohort, some of whom pay the fees in $100 bills, this new imposition may simply mean they stop the course, stay home and lose hope, and add to the growing numbers of the unemployed and unemployable,” O’Toole said in his missive.