Tax collection down, arrears collection climbing – Jordan
Tax collection continues to be down but the Guyana Revenue Authority’s (GRA) arrears collection figures have climbed, Minister of Finance Winston Jordan has said.
“At the end of May, the VAT was $1.8 billion down, as compared to 2016. We are not raking in any money here. What we are raking in at the moment is arrears. Arrears have been up by $4.3 billion. That is what has saved us so far, the collection of arrears,” Jordan told a Guyana Manufacturing and Services dinner last week.
“Contrary to what is felt, that we are raking in moneys, let me make it known, let me give you some figures, the income tax was down $1.2 billion, relative to 2016,” he added.
The GRA had earlier reported that VAT was down, with its Commissioner Godfrey Statia reporting that for the first quarter of 2017, earnings were at least 10% less, than for the same period last year.
While Statia equated this decrease to the reduction in the rate of VAT from 16% to 14%, Chairman of the GRA Board Rawle Lucas reminded that VAT revenue was directly linked to expenditure, and any analysis of VAT revenue must take into account the level of spending and the level of imports. VAT has been pivotal to tax earnings.
The GRA Commissioner explained that simply because of the reduction in rate and the rise in the registration threshold, VAT revenue would’ve been expected to reduce by 12.5 %, but the moving of certain things to standard rated, and moving from zero rated to exempt, saw expectations moving towards a levelling of the process.
He maintained that this levelling had not yet been achieved because it was early in the year, and instead a downward trend has been observed.
In February, the Ministry of Finance had reported that $3.7 billion in VAT was collected in January, 2017, an increase of 12.3 % over 2016, a growth attributed to the value of imports.
Jordan said that often he hears the cries of the business community that VAT on electricity was affecting their businesses, and could not fathom how this was so, since VAT was not being collected on power up to the end of May this year.
“The VAT on electricity, as at the end of May, was not being collected. So I cannot understand how businessmen could say that the VAT on water and such, were killing them. They were not paying any tax. The VAT is being blamed for everything. Our relationships have to be moved from anecdotes to evidence-based discussions, otherwise we will be in this all the time.
“I can’t have the PS saying that the VAT killing them but they can’t show you…Nobody wants to pay tax but everybody wants a service,” Jordan added.