Keeping VAT on education: O’Toole, others blasts Govt’s ‘unilateral’ decision

…in light of public outcry to have imposition repealed 

-Too many questions unanswered- O’Toole

Director of School of the Nations, Dr Brian O’Toole, whose organization has been fervently articulating against Government’s move to impose 14 per cent Value Added Tax (VAT) on private education, has issued several thought provoking questions to the APNU/AFC Administration, the intent of which it would seem is, to get Government to reconsider its recent Cabinet decision to keep the tax in place, with a view to re-evaluate it in 2018.

O’Toole has also garnered responses from prominent figures, who have put the Administration on blast for its ‘unilateral’ decision to continue to impose the tax, even tough many stakeholders have decried the consequences the imposition of such a tax would have on the future of education in Guyana, particularity as it relates to the poor and the middle class.

O’Toole quoted, one such prominent figure, Roy Beepat Chairman of the Giftland Group of companies who said “On Behalf of the Giftland Group of companies we urge the Government to repeal this tax on our students, apart from the marginal families who would have to drop their children from private education, somewhere inside there we may be depriving a future Leader the opportunity to develop and achieve.

“This cannot be a better life for our people when it is so oppressively against our poor and aspiring, as the rich will not feel the effects of this tax, if the Government feels that there is unfairness in tax collections do this against the offenders not the innocent. This single Tax can and may be the difference between being re-elected and not, as when the 15,000 petitioners go to the poll they will surely remember this.”

See O’Toole’s full statement below:

With so much coverage in the media over the past several weeks about the imposition of a 14% VAT tax on Private Education – is there anything more to say?  I think there is. At the very least, there are many unanswered questions. We are in the midst of Grade 6 assessments where the children of Guyana have to answer a host of questions. This letter is an attempt to pose some questions, not to children but to Guyana’s decision-makers.  This does not pretend to be a research study on the issues rather it is a summary of simple questions posed to about 30 of Guyana “leaders” in search of clear answers on where they stand on this matter.

Some of the answers I received to the questions include the following:

Minister Rajmatan was very candid in stating that that he supports the VAT saying simply that “the government has to raise money” as they have a significant deficit. I should have asked him what other sources of additional revenue the Cabinet considered and why they were rejected. Another omission on my part, as an inexperienced “reporter” was the failure to ask for an explanation on their ‘about face’ on VAT on private health services, how much they had expected to collect from that source and how is the shortfall to be made up?

I then told him that already 10% of our ABE students have dropped out of the course. He said he was “very sad to hear about that.”

By comparison, Marlon Williams the General Secretary of AFC​, was very clear that, in giving a personal not party response, that he was completely opposed to the 14% VAT, saying, that “there should be no VAT on education…. the human capital in any country is its people, as such there can be no such punitive tax on education. …… Guyana has fought for free education for almost 50 years and we simply cannot turn our back on it now”.

The Deputy Mayor of Georgetown, Lionel Jaikaran said, “I sincerely think that the 14% VAT on private education should be rescinded. We are a developing country and the education of our young citizens is preeminent for our long-term growth and economic success.  I give kudos to our public school system, however, it’s a known fact that it is hard pressed to keep up with the demand for higher quality educational services. I myself happen to have three children in the private school system and therefore I’m well aware of the sentiments of other parents that are in my position. While I’m cognizant and appreciative that our Government has to garner finances through taxation to run the Country in an efficient manner, I do believe the private schools that are evading the tax net need to be brought into line and sanctioned, instead of the parents who choose to send their children to the above mentioned institutions.

One of the leaders of the business community, Roy Beepat, said, “On Behalf of the Giftland Group of companies we urge the Government to repeal this tax on our students, apart from the marginal families who would have to drop their children from private education, somewhere inside there we may be depriving a future Leader the opportunity to develop and achieve. This cannot be a better life for our people when it is so oppressively against our poor and aspiring, as the rich will not feel the effects of this tax, if the Government feels that there is unfairness in tax collections do this against the offenders not the innocent. This single Tax can and may be the difference between being re-elected and not, as when the 15,000 petitioners go to the poll they will surely remember this.”

Christopher Ram shared the following in his interview, “As one who was “rescued” by private education offered by the privately-owned Cambridge Academy which later became a victim of the failed no private education policy, I find the imposition on VAT on education to be disappointing, depressing and distressing at a national and personal level. I fear for the potential loss of opportunities for the children of poor parents across the country who might find that the VAT has stretched to breaking point their ability to find an additional 14% on a significant chunk of their meagre budget.

At the personal level, disappointed that a number of key political figures who privately claimed to oppose VAT on education could not convince their colleagues that the removal of the tax was not only the right thing to do, but the bright thing to do; disappointed at some of the uneducated excuses offered for the retention of the tax and the Government’s duplicity when compared with VAT on medical services; disappointed that the Education Minister from the WPA was unwilling to take a stand on an issue which he and his Party have embraced even before its foundation; and most of all disappointed at President Granger who before this fiasco, could properly lay claim to be Guyana’s first Education President. “

Another prominent businessman, Peter Bouchard, stated, “The figures are quite simple –  a $250 billion budget and $350 million expected revenue from private education VAT.   Apart from the fact that VAT is not a service tax, this revenue is a very small portion of the total budget.  We all have to live within our means – in private life, in Companies, in all walks of life.  If the Government has to wring blood from the stone of education to meet its target then I strongly suggest it revisits its target, lest the blood of education in Guyana should dry up and cease to flow and our future so-called” good life” should prove to be empty electioneering words, words which will never again be believed when it comes time to vote”.

A leading Educator from Trinidad, Ravi Ragoonath, simply observed, “It is truly an unfortunate time when Government opts to tax education.”

There were about 20 others that I invited to comment, including a number of Cabinet Ministers. It could be that the contact information for them was incorrect or they were simply too busy, but there was no response.

In preparing this letter I decided to re-read all 1,500 comments that have been published on our Ipetition (see: www.ipetitions.com/petition/education-vat-free). It makes fascinating reading.  On February 24^th the petition was delivered to the President & Ministers Jordan and Roopnarine. There was no response until Gordon Mosley “reported” that the President was going to rescind the VAT decision. Two days later, after this mistake or “fake news”  or change of position it was reported that the President had “changed his decision.”   We continued with the petition, more persons signed and again it was ignored.

There is not one comment, amongst the 1,500 comments published on the on line petition, that supports the 14% tax – not one.  The following is a collection of some of those comments;

• Jerry Bacchus, Pompano Beach, USA, “VAT on education is a backward step”
• Keith Gordon, Guyana, “.. find another way to raise revenue … please speak out Minister of Education.”
• Charlotte Francis, Guyana, “..there must be at least one person with a heart in this decision.”
• Francis Gittens, Guyana, “private education should be funded not taxed.”
• Sunrita Ramlall, Brooklyn, New York, “…. I am a retired Head Teacher ..its unreasonable ..what a shame people.”
• Yashoda, Guyana, “don’t raise an ignorant nations please.”
• Christopher Williams, Guyana, “education is the only way out of poverty.”
• Keshawn McAllister, Linden, “how do you know that I man not paying a loan to afford private education?”
• Oswin Lynch, Guyana, “where is the study which validates this measure?”
• Maria, Guyana, “this is discriminating against private school children.”
• Renee Chester, Guyana, “this is not what I voted for.”
• Annika Narine, Guyana, “can I ask the persons responsible for this to highlight the benefits of this to us?”
• Geetanjali Lu, Guyana, “ if you want to help the country let education be VAT free”
• Darma Persaud, Guyana, “VAT on education means Yes to school drop out.”
• Gordon Britton, Grand Bend, Canada, education is a human right not a good or service to be taxed like a luxury car.”
• Merle Huntley, Cape Town South Africa, “the benefit to the state of an educated population is way more valuable than any amount of tax revenue.”
• Janet Joseph, USA, “President Burnham promised free education from the womb to the tomb.”
• Joanna Phillips, Guyana, “why should you pressure me for wanting to educate my child?”
• Jason Alli, Guyana, “why should this administration punish me for wanting the best for my child?”
• Rajkumarie Singh, Missassauga, Canada, education should be free …give everyone a chance.”
• Alicia Isaacs, Guyana, “for better future leaders lets say VAT free education.”
• Hemchand Balli, Guyana, “the government should show that they care for the people.”
• Azad Khan, Guyana, “..terrible …retrograde move.”
• Aaron Josiah, Guyana, “the poor find it difficult and sometimes impossible to afford higher education …VAT makes it even harder.”
• Anne Pearson, Dundas Canada, “education is far too important to discourage persons from attending schools.”
• Vaidehi Narine, Guyana, “the future depends on us, don’t try to make it even harder.”
• Dominic Kibak, Kenya, “we have to honour the UN Declaration of Humna Rights.”
• Vera Zhigalova, Czech Republic, education is not a thing by which we should build a country’s finances.”
• Rajeev, Guyana, “so much for free education.”
• Anil Balli, Guyana, “show that you really care for the people of Guyana.”
• Marieo Chung, Guyana, “taxing education is not conducive to the development of this country.”
• Somava Stout, USA, ä tax on education risks the future.”
• Mona, USA, are we trying to go back to the time when no one could read and write?”
• Hussain Abdelaziz, Milan Italy, education is the key to our future.”
• Kevin McKenzie, Guyana, “people expect the government to be compassionate towards its people.”
• Sharon Kwok, Missassagua Canada, “how is it possible for a government to put a tax on education?”
• Andrew Budhram, Arima Trinidad, “draconian at best.”
• Rondecia Wallace, Guyana, “this move by government is heartless.”
• John Edwards, French Guiana, “to tax education is absurd.”
• Imran Bacchus, Guyana, adding VAT just makes the future of many Guyanese more difficult.”
• Amanda B, Guyana, “Yes I have a choice … 2020.”
• Jason Joseph, Guyana, “it demonstrates backward thinking.”
• Peter Boucard, Guyana, “this is one of the most backward steps ever taken by any government in the world.”
• Jaime Singh, Guyana, “I am presently studying at a private school …VAT means I may have to drop out.”
• Eudo Singh, Guyana, “by destroying the buds you will see no flowers.”
• Deen Sharma, Guyana, “the tax on education is unfair and counterproductive.”
• Yonette Gordon, Guyana, “APNU/AFC said education should be free for all.

The questions therefore are:

Question #1:  How does a coalition government, with a majority of one, manage to ignore a petition signed by more than 15,000 persons?  How can it be accepted that such a statement by more than 2% of the population, and a significantly higher percentage of the “voting” population, can be totally ignored?

Question #2: ​How can the mantra that there is a “huge budget deficit” be repeated so often by those in power in recent weeks and yet none of the leaders suggest other possible sources of revenue? In our homes throughout this country if we have a “deficit” we simply cut spending.  Is the huge unpopularity that the 14% has created worth the extra dollars in government coffers?

Question #3:  Another often repeated statement has been that ‘so many of the private schools are not paying their taxes’.   Nobody against the 14% VAT has argued against this point. Nor should they. If the defaulters paid what they should there would be no need for extra burdens on those who are already paying significant sums in taxes. Why is it seemingly so difficult for a government with all its powers to resolve such a flagrant injustice?

Question #4: If it is accurate, as some Ministers have suggested in the media, that certain schools have been granted tax free status as a “religious school” why is the same concession not given to schools run by persons of other Faiths?  Is that justice?  As Christopher Ram observed when he was interviewed for this article, “the laws are very strict on tax exemptions and Government needs to explain the law under which either they or their predecessor made some schools exempt from income tax. The same is true of UG.

Question #5: Senior Cabinet Ministers have repeated the statement, “they have a choice” presumably meaning that the parents can save significant sums by simply returning to public schools.  Has the government stated that the public education system, which is presently the target of a Commission of Inquiry because of “shortcomings” as stated by various Ministers, has the capacity to re-integrate the thousands of persons who may be forced to leave public schools?

Question #6: The handful of commentators of the pro 14% lobby assert that there is no need for private education as the results from public schools is more than adequate. Have any of those statements been supported by research evidence?  The overwhelming body of evidence from national Primary examination results is that private schools are significantly over represented in terms of “success”.  Another commentator talks about CSEC success at the top public schools – did he factor out of the equation the contribution of the lessons machine before school, after school and at weekends?  Are lessons teachers liable for the 14%?

Question #7: If you cannot afford the 14% increase why not simply return to the free government provision?  Within a few weeks of the 14% imposition more than 10% of the 800 ABE students at Nations have dropped out and joined the ever-swelling ranks of the unemployed and unemployable in Guyana. The public system has no equivalent course to the ABE programme offered at a small handful of private centres.  Furthermore, if the thousands of students at the 8 Off Shore Medical schools cannot find the additional 14% where will they go? Many will return to India, Nigeria, Rwanda, Bangladesh with a jaundiced view of Guyana.  The Aerontaical School attracts students from Guyana and the wider Caribbean – the government makes no attempt to provide them with state sponsored training.  In addition, what will happen to the Jamaican Law school that was introduced across the front pages of our newspapers a few weeks ago, will the Jamaican Consortium simply look for a more conducive country to do business?

Question #8: Do we care as a people about the international image that has been created by this tax. Many thoughtful and serious commentators who have actually researched this issue, such as Monique Ifill, cannot find a single example anywhere in the world that has imposed a similar tax on private education. By contrast the critics of the 14% give example after example of enlightened governments throughout the world giving financial incentives to private schools as they reduce the burden on the state? How have we been able in Guyana to fly in the face of all this evidence?

Question #9: Is it true, as some government Ministers assert that “private schools are making significant sums of money?”   That may be a simpler question to answer. Yes, some are making “significant” money.  Is that wrong?  We could instead create a state like North Korea where we would not have that problem. A more pertinent question is “do those schools pay their fair share of tax?” – the ones that are tax compliant pay millions of dollars in Income Tax and Corporation Tax, as indeed we should, but not an additional 14%.    We need to be careful that we are not developing an anti-private enterprise culture in Guyana – with a huge oil flow around the corner that will not send the right message to the international developers who will be essential to develop those prized riches and who are, no doubt, watching this VAT saga.

Question #10: Why don’t the private schools simply pay the 14% themselves?  Yes, that can be done – once all the other businesses in Guyana do the same then the private schools can follow suit.

Question #11: Minister Ramjattan supported his Yes vote by saying simply that there is a significant deficit in the budget and that no Ministry would agree to a cut in “their” expenditure.  If this happened before elections, rather than after, would they not have been obliged to sincerely listen to and respect the views of the people?

Question #12:  A large public “consultation” was held at the Cultural Centre last week. Just before the majority of persons walked out, while the Prime Minister was still talking, it was announced that no change re the 14% would be made for at least 9 months. If such a decision had already been made what was the purpose of the meeting?  Would such unilateral action have been successful prior to elections?  Why can it be thought to be acceptable now?

Question #13: In conclusion, where does that leave us?  By abandoning any decision for almost a year the government has succeed in exhausting and frustrating thousands of persons.   A significant number of the youth of this country, already disenchanted by politics are now totally disillusioned. They look for their leaders and can’t find them.

Question #14: In retrospect are the dollars taken worth the pain, suffering and disenchantment of thousands and thousands of persons?

For the children to succeed at their exams this week they would have been required not only to attempt all the questions but more importantly give clear and concise answers.  We surely deserve answers to each of the above questions. Is that too much to ask for?

Dr Brian O’Toole
Director
Nations