The freight train of VAT is barreling towards this Federation on course for November 1st regardless of the legitimate concerns of interested stakeholders like the Chamber of Industry and Commerce. Instead of listening to good advice, which this Labour Administration never does or the federation would have had better economic management, the prime minister is hell bent of telling tall tale about the effect of the VAT.
The cost of living, the public is repeatedly told, will not rise because so many taxes will not replaced, items will be zero rated and items will be exempt. Nevermind the ordinary consumer will be forced to pay taxes for the first time for basic necessary services like vehicle insurance or even utilities provided by the government.
The deception being perpetrated on ordinary people is threefold. In the first place those taxes being replaced are not going away which is the impression being given by the government. What will happen, just in time for Christmas, is that eleven (11) of the twelve (12) taxes being repealed are well below the 17% of VAT.
The other taxes besides consumption tax at 22.5% which include hotel and restaurant tax (7%), cable TV tax (5%), vehicle rental levy (5%), insurance premium tax (5%), export duty (5%), public entertainment tax (10%), lotteries tax (10%), gaming machine tax (5%), traders tax (3%), IDD calls tax (5%) and the parcel tax (1.5%) will all be raised to 17% VAT. Most of those taxes will increase by over 200%.
Then there are those exempt items that will not be within the VAT legislation at all. However, those items include some services that few local people use like offshore companies. Other exemptions for daycare, rentals (partially), school fees, water for homes, religious services, bus fares and so on. Some of these exemptions appear suspect as the exact exemption for rentals remains unknown and the situation with bus fares is in inexplicable given the increased costs bus owners will face.
Finally there are those items with the strange zero rate. These items are those that everyone needs and the poorest people need the most: rice, flour, milk, sugar, infant formula, diapers, fuel, medicines for certain diseases. What the zero rate means is that he government already anticipates that the 17% applied to virtually every single commodity from eggs to cars to chairs will not be enough. To accommodate the expected shortfall therefore the above items have been given a rate of 0% which brings them within the VAT framework so when the time comes the minister of finance will simple need to raise the rate from zero (and/or 17%). Really hard times are coming.
