End VAT, Minister Imbert

THE EDITOR: Open letter to the Minister of Finance.

Whenever the Government changes the way consumers are taxed, it does it with one overarching goal in mind: to reach further into their pockets and increase their involuntary contribution to the Government, and not as a means of helping consumers – as it glibly states in its propaganda – as it signs the new tax law with one hand and reaches into your wallet with the other.

“The most notable change to the taxation system during the structural adjustment period was the introduction in 1990 of the value added tax (VAT), which replaced the complicated system of indirect taxes that existed.” If you believe that political Central Bank mumbo jumbo, then the people of this country will continue to be pauperised at every step of the way – from income tax deductions to consumer goods, except for the politicians with tax exemptions on high-value items – all built into laws that benefit themselves.

Since value-added tax is applied to consumables and paid by the final purchaser, it is a regressive form of taxation that works against people with low incomes, according to taxpolicycenter.org. It is applied in a complex system devised by the Government to confuse and delay any VAT refunds due.

“Value added tax, or VAT, is applied to both goods and services in Trinidad and Tobago and is included in the final price of the product. VAT is charged at a rate of 12.5 per cent. VAT-registered businesses must collect VAT from customers, submit VAT returns, and pay any VAT that they owe to the Inland Revenue Division of the Ministry of Finance. VAT-registered businesses can deduct any VAT they pay when purchasing goods and services for the business from the VAT that they collect from customers. If the amount of VAT a business pays is more than they collect, the Inland Revenue Division will refund the balance.” Is that what politicians call reducing the old “complicated” system with VAT?

Why not revert to a more straightforward system where the final purchaser paid the only tax on commodities and end this Government’s usage of VAT refunds instead of refunding them to businesses promptly? When it takes months, years even, for companies to receive their refunds, some may close their doors permanently, as many did during the covid19 years.

Cash flow is vital to small businesses and they need to get their refunds monthly, not accumulated and paid annually. Will the Government even pay them interest for using their money, or did the laws it passed allow it to use the money tax-free?

What about following the US system with no VAT to complicate the simple sales process? Although every state in America has different sales-tax structures, why not use Florida as an example? “The state sales and use tax rate is six per cent, although some goods and services are exempt, such as groceries and prescription medicine. Counties are allowed to add a discretionary sales surtax, ranging from 0.5 per cent to 1.5 per cent.”

Let us stop this Government from legally using money that is not its to use by ending VAT and applying a sales tax of seven per cent to the final purchaser (VAT is now 12.5 per cent) and passing on the savings to the consumers, especially low-income earners who could use the extra savings during these trying times.

And how on earth can this Government charge taxes on services when “services in Florida are generally not taxable. However, if the service you provide includes creating or repairing a product, you may have to deal with the sales tax on products. Tangible products are taxable in Florida, with a few exceptions.”

If Americans do not allow their government to bleed them dry, why should Trinis allow it in this poverty-stricken land that is getting poorer daily as the cost of living rapidly escalates?

Minister Imbert, are you listening? Please help people in need with tax reform, or your party will suffer the consequences in the upcoming general election. You will be surprised to see how this nation will flourish when we reduce economic suffering.

REX CHOOKOLINGO

rexchook@gmail.com