Saturday, April 7, 2012

PM Talks VAT

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3 comments:

Anonymous said...

Wow! Great but useless history! Doesn't tell me one %#$@ about what to do, or to prepare myself for things that will be done by people who are going to interpret for others, what they had not understood themselves.

Yeah man!Because some things are in black and white, that does not mean that they are necessarily relevant, you know, my man.

April 8, 2012 at 8:17 PM
Anonymous said...

Not even the PM himself understood all that he was saying! Far less for all those people who he scared the sh!t out their pants!

April 12, 2012 at 9:55 AM
Anonymous said...

The main disadvantages which have been identified in connection with the Value Added Tax are:

1) VAT is regressive
It is claimed that the tax is regressive, ie its burden falls disproportionately on the poor since the poor are likely to spend more of their income than the relatively rich person. There is merit in this argument, particularly if it attempts to replace direct or indirect taxes with steep, progressive rates. However, observation from around the world and even Guyana has shown that steep tax rates lead to evasion, and in the case of income tax act as a disincentive to effort.

Further, there is now a tendency in most countries to reduce this progressivity of taxes as has been done in Guyana where a flat rate of income tax has been introduced. In any case VAT recognises and makes room for progressivity by applying no or low rates of tax on essential items such as food, clothes and medicine. In addition it allows for steep rates of tax on luxury items, although this can create problems for administration and open opportunities for evasion by way of deliberate misclassification, a problem incidentally not peculiar to VAT, and which takes place extensively in the area of customs duties.

VAT is too difficult to operate from the position of both the administration and business.

VAT favours the capital intensive firm
It is also argued that VAT places a heavy direct impact of tax on the labour-intensive firm compared to the capital- intensive competitor, since the ratio of value added to selling price is greater for the former. This is a real problem for labour-intensive economies and industries.

April 21, 2012 at 6:53 AM

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