Is the VAT Act being circumvented?

THE EDITOR: On listening to the Ministry of Finance outline the process of making payments of the VAT refunds being owed to the business community, I wondered how come no one has challenged the legality of this action.

So, not being an expert, I referred to a friend much more knowledgeable than I am on the subject and came to the following conclusion:

The VAT bonds are for a three-year period and carry a 3.5% interest rate and the ministry has said that such interest would facilitate the redemption of the bonds by the financial institutions at par value.

No loss will be suffered by the original bond holders.

Seems a good deal at first glance for those long-suffering business affected by Government’s delay in honouring its statutory commitment.

However, what has been swept under the carpet is the fact that the VAT Act states that an interest rate of one per cent per month or part thereof (12 per cent per annum) is payable on VAT refunds that remain outstanding for over six months.

So, in fact what has been proposed is actually a reduction of the interest that is supposed to be paid on the refunds to 3.5 per cent from 12 per cent per annum.

In doing so, the ministry seems to have acted ultra vires to the VAT Act and surely this should have been pointed out by the minister's colleague, the Attorney General, especially as this is not the first time this has been done and can open the administration up to more litigation.

By the way, while I’m on tax issues, the Property Tax would be much more palatable to the population if it were to be paid into the regional corporations instead of the Consolidated Fund, as no one really believes politicians. Just my two cents.

RICHARD TRESTRAIL

Port of Spain