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Khurshid Sattaur
Commissioner General
Mission Statement
Our mission is to promote compliance with Guyana’s Tax, Trade and Border Laws and Regulations through education, quality service and responsible enforcement, thereby contributing to the economic and social well being of the people of Guyana. |
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Nadia De Abreu
Director - Corporate Communications Unit
Tel: (592) 227-3680
ext 222 |
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GRA disturbed at increasing bread prices – 0 % intended to benefit consumers not businesses
Commissioner-General of the Guyana Revenue Authority Mr. Khurshid Sattaur said the GRA is very troubled and disturbed at news reaching the authority that one of Guyana’s leading bakeries, Bakewell has increased its breads and tennis rolls by approximately 20 % effective today.
Bakewell by way of a flier states that “with the continued large increases in prices for flour, electricity, fuel, vegetable shortening, packaging, shipping cost and increases in the cost of imported raw materials and the consequential increase in customs duties payable etc..” have forced the company to increase its prices.
Last week Mr. Sattaur warned of the negative implication of the National milling Company’s announcement that it will retain its 16 % VAT price even though the government has zero-rated flour with effect from March 1, 2008.
He said that while VAT registered bakeries were able to recover the VAT they would have paid to acquire the flour previously when flour was taxable at the standard rate of 16 %, now that it has been zero-rated they will not be able to have any input tax credit for flour and if Namilco indeed increased its flour by 16% it was likely that all flour-related products would increase as there is no 16 % to be recovered but rather it would be passed on to the consumers.
“Bakewell’s announcement is testimony to what we had predicted. Reflecting on the situation, one would logically think that it might have been advisable to retain flour as a taxable standard rated item,” Mr. Sattaur said.
He reiterated that intention of zero-rating basic commodities used by the average household including flour was to ensure that consumers are relieved of high prices which were reportedly associated with VAT. We see now that VAT was removed but yet the prices keep going up. It means that the government’s efforts have failed to in this regard solely because of the callous business practices of some businessmen in this country,” he said.
The GRA hopes that the government and more particularly consumers are taking note of what is happening and that they will take the necessary actions to ensure that consumers are not swindled.
Mr. Sattaur said that while the GRA has been criticized for defending consumers, the Authority will continue to speak out against practices that are bent on exploiting consumers for personal gain and more so because the GRA seems to be the target when prices increase.
He said that while international market values do have an impact we still believe that some of the prices are unjustifiably increased.
Checks made at other bakeries in the city revealed that prices for bread remained the same and some owners also indicated that there was no intention of increasing their prices.
“Already VAT registrants are benefiting from relief of all of their input taxes as readily as they make sales. We do not see these benefits being passed on to consumers, the GRA therefore views such a move as a selfish and unconscionable act that deserves to be condemned and thwarted by all righteous Guyanese,” Mr. Sattaur said.
Mr. Sattaur said that those businesses that use flour as their main ingredient in the manufacturing process will continue to recover the VAT on any other standard rated inputs into their operation. However since flour is now zero-rated, there will be no VAT to recover on flour, therefore if indeed the company increases its flour prices in line with the 16% VAT rate, then bread and all flour-products will increase since there will be not VAT to be recovered. In turn, businesses are likely to pass on those costs in their prices to consumers, he clarified.
“When we speak out against the irresponsible practices of local businesses, the GRA is heavily criticized, but it is this very kind of practice that leads us to take such strong positions. Further it is exactly the kind of practices by businesses that make the government and the GRA apprehensive of instituting further reform measures such as zero-rating additional items or even reducing the rate of the tax since there is no guarantee that the consumers will benefit,” Mr. Sattaur stressed.
He said the move by Namilco has borne out the GRA’s position that even if the tax is reduced businesses will not pass on the benefit to consumers contrary to claims that a reduction in the VAT rate will bring relief to consumers.
The GRA maintains its position that the introduction of VAT should have resulted in reduced prices since it replaces six taxes which had higher rates than the 16 % now applied and it is a shame that businesses would use the VAT system to exploit consumers.
“If only businesses are prepared to pass on the benefits to consumers we would have a more vibrant economy that would be prosperous for businesses and consumers alike,” he said.
The Commissioner-General is therefore urging consumer bodies to get on board and intervene to ensure that consumers exercise and enjoy their rights in a free market system.
“In the market, the consumer is king. He can choose what he buys and where he buys,” the GRA head said.
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