Sto­ries by Gail M.M. Alexan­der

Se­nior Po­lit­i­cal Re­porter

Sev­er­al busi­ness ex­perts and groups are in favour of a sales tax to re­place the Val­ue Added Tax (VAT) sys­tem - a pro­pos­al favoured by Fi­nance Min­is­ter Colm Im­bert and Op­po­si­tion Leader Kam­la Per­sad-Bisses­sar.

At a T&T Man­u­fac­tur­ers’ As­so­ci­a­tion (TTMA) post-Bud­get fo­rum last Tues­day, Im­bert com­ment­ed on the an­nu­al prob­lem of VAT re­funds. He said ex­emp­tion on VAT for the en­er­gy sec­tor is be­ing con­sid­ered, as well as a sales tax.

Im­bert said he pre­ferred a sales tax to hav­ing to give VAT re­funds, adding that Gov­ern­ment will have to con­sid­er the rev­enue gen­er­at­ed from the sales tax com­pared to VAT and there would al­so be the is­sue of com­pli­ance with a sales tax and its size.

Per­sad-Bisses­sar, in her Bud­get re­ply last Fri­day, not­ed that the busi­ness com­mu­ni­ty’s prob­lems in­clud­ed Gov­ern­ment’s “hi­jack­ing of VAT re­funds.”

She said a sales tax is a very in­ter­est­ing con­cept which she is in­clined to con­sid­er since in the US sales tax is paid at point of sale, while “with VAT your mon­ey is kid­napped by Gov­ern­ment.”

Per­sad-Bisses­sar said Im­bert should se­ri­ous­ly con­sid­er a sales tax to re­place VAT and al­so rec­om­mend­ed amend­ment of the VAT Act.

Var­i­ous stake­hold­ers have al­so weighed in on the is­sue.

Vas­ant Bharath, for­mer Peo­ple’s Part­ner­ship Min­is­ter:

“This is a one time tax on the fi­nal sell­ing price. The amount is then payable at the fi­nal point of sale to Gov­ern­ment. VAT how­ev­er is charged every time a prod­uct is im­proved by the man­u­fac­tur­ing process, or sim­ply changes hand.

“Un­for­tu­nate­ly when VAT is col­lect­ed, it has to be paid to Gov­ern­ment and there­in lies the prob­lem - Gov­ern­ment holds on to it and starves busi­ness­es of cash flow. The sales tax is sim­pler, clean­er and no bur­den on busi­ness.

“Prices will not be high­er than now. Re­mem­ber, VAT is charged at every step in the trans­ac­tion so it’s a tax on a tax - that is, cu­mu­la­tive. But sales tax is a sin­gle tax on the fi­nal prod­uct. It should be pitched at around six or sev­en per cent as in the US.”

Ozzie War­wick, Joint Trade Union Move­ment:

JTUM is re­search­ing this mat­ter but we firm­ly main­tain that what­ev­er mea­sure is adopt­ed as a VAT so­lu­tion, it must lead to a re­duc­tion in prices for or­di­nary peo­ple. “

Ki­ran Singh, Pres­i­dent, Greater San Fer­nan­do Cham­ber of In­dus­try and Com­merce:

“It has the po­ten­tial to solve some of the Min­is­ter’s con­cerns. Tax col­lec­tion would be sim­pli­fied and the dol­lar val­ue of re­mit­tances stand to in­crease. As an in­di­rect tax passed to con­sumers, it re­quires less ac­count­ing and be­comes less cost­ly for the sell­er to re­mit the tax to Gov­ern­ment. Busi­ness­es may feel less com­pelled to avoid tax col­lec­tion. Tax of­fi­cers would re­quire min­i­mal train­ing. Tax rev­enue can in­crease as there’s no re­fund and no fi­nan­cial thresh­old as all con­sumers would fall in­to this tax net.

“Con­sumers could ben­e­fit with pos­si­ble low­er tax at the reg­is­ter, re­duc­ing per­son­al ex­pense. One im­me­di­ate is­sue of con­cern would be if the tax would be mul­ti-stage or at the fi­nal sale point. An­oth­er is what would be a fair, eq­ui­table per­cent­age for a sales tax giv­en our cur­rent eco­nom­ic con­di­tions. We be­lieve it should be low­er than the ex­ist­ing VAT rate.”

Gre­go­ry Aboud, Pres­i­dent, Down­town Own­ers and Mer­chants As­so­ci­a­tion (DO­MA):

“A sales tax would work for DO­MA, but there should be con­sul­ta­tions to en­sure such strat­e­gy sat­is­fied its ob­jec­tives.

“Trinidad and To­ba­go would need to be sat­is­fied that a sales tax won’t in­crease the cost of liv­ing. We must en­sure that by not charg­ing a regime to pre­vent Gov­ern­ment get­ting in­to li­a­bil­i­ty, one doesn’t cre­ate li­a­bil­i­ty on peo­ple.”

Bal­dath Ma­haraj, Pres­i­dent, Ch­agua­nas Cham­ber of In­dus­try and Com­merce (CCIC):

“CCIC sup­ports a sales tax to re­place VAT giv­en VAT is­sues, and such a tax should be low­er than the cur­rent 12.5 per cent. While de­vel­oped coun­tries have em­braced VAT it makes more sense to re­place it with an eas­i­er sys­tem to ad­min­is­ter that gives nec­es­sary trans­paren­cy.”