Business wary over VAT reduction

Speaking to Newsday yesterday, president of the San Juan Business Association, Gail Mehair stated that if VAT is reduced, the Government’s revenue will be reduced.

"If the Government plans to reduce VAT then they must have a mechanism in place to regain what they have lost," Mehair said.

She said that although the State has gained an extra $2 billion from oil prices, the Government cannot just reduce VAT since some of that money has to go towards the Revenue Stabilising Fund.

"It is a wait-and-see approach, I cannot say that I am giving my full support to this initiative yet since I do not have all the facts," Mehair said.

"There are other ways to reduce the cost of living but if the Government sees that the lowering VAT will send inflation down then the move will be welcomed."

Meanwhile, Paul Quesnel, president of the Trinidad and Tobago Manufacturers’ Association (TTMA) expressed pessimism on Enill’s statement. "VAT is a tax that was introduced to be able to tax all citizens across the board and there are self-employed persons who are outside the general tax net," he said.

He said that what the Government is more likely to do is reduce the personal income tax.

"There are a number of people who escape paying tax and VAT was implemented to deal with those persons, so by Enill saying that the Government is considering reducing tax, that is something very hard for me to beleive," Quesnel said.

At an NAR press conference yesterday, Jerome Chaitan, NAR public relations officer, recommended that VAT be reduced by 10 percent next year and by a further five percent in 2007.

"At that time there should be an overall study of VAT and its future as a mechanism in Trinidad and Tobago," Chaitan said.