Joshua Seemu­n­gal and

Sascha Wil­son

Cab­i­net Note 1032, dat­ed May 21, pre­sent­ed by the Min­istry of Fi­nance, re­ferred to po­ten­tial changes to the Val­ue-added Tax (VAT) rate, in­come tax, cor­po­ra­tion tax, a busi­ness levy, and new tax brack­ets for high-in­come in­di­vid­u­als and com­mer­cial banks.

How­ev­er, while the Op­po­si­tion be­lieves the doc­u­ment refers to the Gov­ern­ment’s in­ten­tion to raise the VAT rate and in­crease oth­er tax­es, the Gov­ern­ment main­tains that is false and has no in­ten­tion to do so.

“There is no rec­om­men­da­tion to in­crease (or de­crease) VAT or any oth­er tax in the note, and thus no de­ci­sion was made, and the pro­posed de­creas­es or in­creas­es in tax were thus nev­er dis­cussed,” the leader of Gov­ern­ment busi­ness, and Min­is­ter of Hous­ing and Ur­ban De­vel­op­ment, Camille Robin­son-Reg­is told Guardian Me­dia yes­ter­day.

Op­po­si­tion Leader Kam­la Per­sad-Bisses­sar pre­sent­ed a doc­u­ment on Mon­day night that she claimed sub­stan­ti­at­ed her claim that the Gov­ern­ment is con­sid­er­ing in­creas­ing tax­es, in­clud­ing VAT, to gen­er­ate rev­enue.

Hold­ing up what was pur­port­ed to be Cab­i­net Note 1032 dur­ing her Star Team meet­ing in Bar­rack­pore, Per­sad-Bisses­sar said, “Well, tonight I have the doc­u­ment that sup­pos­ed­ly doesn’t ex­ist. I do not en­gage in fraud or fake doc­u­ments.”

Last Fri­day dur­ing her con­tri­bu­tion to a mo­tion in the House of Rep­re­sen­ta­tives to sup­ple­ment the 2023–2024 Bud­get by $2.3 bil­lion, she claimed the Gov­ern­ment was broke.

She read from a doc­u­ment that the Gov­ern­ment was con­sid­er­ing in­creas­ing tax­es to earn rev­enue. “We are on a dan­ger­ous rapid road to fos­ter­ing a com­plete eco­nom­ic col­lapse of our econ­o­my. Nev­er be­fore has our coun­try seen such wan­ton in­com­pe­tence, cor­rup­tion, and mis­man­age­ment of our econ­o­my,” Per­sad-Bisses­sar said.

Prime Min­is­ter Dr Kei­th Row­ley, how­ev­er, rub­bished her claims. He said, ”Where did the Op­po­si­tion Leader get that from? I can tell you with­out fear of con­tra­dic­tion, nowhere in the cor­ri­dors of this Gov­ern­ment that I lead is VAT in­crease a dis­cus­sion. Nowhere.”  

Yes­ter­day morn­ing, Fi­nance Min­is­ter Colm Im­bert took to the X so­cial me­dia plat­form to con­demn Per­sad-Bisses­sar’s claim in Bar­rack­pore, say­ing that she lied.

“She says she has proof that the Gov­ern­ment in­tends to in­crease VAT. How­ev­er, all she has is cal­cu­la­tions show­ing the ef­fect on rev­enue of de­creas­ing or in­creas­ing tax­es,” he said.

Point nine of page five of ap­pen­dices en­ti­tled ‘Min­istry of Fi­nance: Fis­cal Mea­sures—Rev­enue Gen­er­at­ing and Ex­pen­di­ture Re­duc­ing Mea­sures,’ stat­ed that a VAT rate amend­ment could re­sult in an es­ti­mat­ed rev­enue of $560 mil­lion.

“For every one per cent in­crease in the VAT rate, $560 mil­lion VAT rev­enue is es­ti­mat­ed to be earned. For every one per cent de­crease in the VAT rate, $560 mil­lion in VAT rev­enue is es­ti­mat­ed to be fore­gone.

“NB: An in­crease in the VAT rate to 15 per cent can re­sult in ad­di­tion­al rev­enue of $1.4 bil­lion in rev­enue earned an­nu­al­ly once prop­er­ly ad­min­is­tered,” the doc­u­ment stat­ed. In the com­ments sec­tion of the doc­u­ment, a com­ment re­fer­ring to a VAT Amend­ment read, ‘Last amend­ed in the 2016 Bud­get (re­duced from 15 per cent to 12.5 per cent).’

Ap­pen­dix four of the Cab­i­net note al­so re­ferred to pos­si­ble rev­enue gen­er­a­tion through oth­er ini­tia­tives.

Among them:

• ↓A new tax brack­et for High-In­come In­di­vid­u­als (es­ti­mat­ed rev­enue of $90 mil­lion)–In­tro­duce a new tax brack­et of 32.5 per cent on high-in­come in­di­vid­u­als whose charge­able in­come ex­ceeds $2 mil­lion per an­num.

• ↓New tax brack­ets for com­mer­cial banks (es­ti­mat­ed rev­enue of $86 mil­lion)– At present, com­mer­cial banks pay a tax rate of 35 per cent on their charge­able prof­its. It is pro­posed to in­tro­duce a new tax sys­tem as fol­lows: a) Charge­able prof­its up to $500 mil­lion-35 per cent b) Charge­able prof­its in ex­cess of $500 mil­lion-37.5 per cent

• ↓In­tro­duc­tion of a tier tax­a­tion sys­tem Cor­po­ra­tion Tax-Petro­chem­i­cal Com­pa­nies a) Charge­able prof­its up to $100 mil­lion-35 per cent b) Charge­able prof­its in ex­cess of $100 mil­lion-37.5 per cent

• ↓Cor­po­ra­tion tax (an es­ti­mat­ed rev­enue of $216 mil­lion)

• ↓A tax amnesty (an es­ti­mat­ed rev­enue of $800 mil­lion)

• ↓A busi­ness levy (an es­ti­mat­ed rev­enue of $100 mil­lion)

• ↓Re­vised penal­ties to en­sure com­pli­ance with the Board of In­land Rev­enue (an es­ti­mat­ed rev­enue of $20 mil­lion)

• ↓A new drug ap­pli­ca­tion fee ($21.2 mil­lion)–It is pro­posed to in­crease the new drug ap­pli­ca­tion fee from $750 to $5,000 to har­monise the cur­rent fee with the re­gion­al mar­ket fee.

• ↓Re­cruit one hun­dred (100) short-term of­fi­cers. Con­duct a se­ries of com­pli­ance ex­er­cis­es to gen­er­ate im­me­di­ate tax rev­enue of $350 mil­lion.

There was, how­ev­er, no con­fir­ma­tion or de­fin­i­tive sug­ges­tion in the doc­u­ment that VAT or any of the tax in­creas­es would oc­cur.