Low turnout in commercial capital for GST forum
They call themselves the GST team: a group of public officers from the Sales Tax, Income Tax, and Customs departments who have been charged with the mandate to tour the country in a series of informational meetings with the public on the new tax. Though some important kinks have yet to be ironed out in Belmopan, the bill is expected to become law early next year… and as News Five’s Janelle Chanona found out, businesses have been slow in coming forward with questions on how the General Sales Tax will affect profit margins.
Janelle Chanona, Reporting
Today as officials held the first public forum in the commercial capital on the General Sales Tax, it was hard to miss the fact that turnout was low. With a tentative implementation date set for April first 2006, by all accounts, an effective public relations campaign is key for a smooth transition from the current sales tax to the GST.
Godfrey Arzu, Customs Expert, GST Team
?The thing that Belizean businesses need to know is that this is a tax on consumption and not a tax on business, they are merely acting as agents to collect the tax for government.?
According to the Customs Expert Godfrey Arzu, intrinsic differences between the Sales Tax and GST should make goods and services cheaper in Belize.
Godfrey Arzu
?My professional assessment is that the GST removes the cascading effect that the current sales tax has. What we mean by cascading is that the system that appears when you have tax being charged on tax. Under the current sales tax whenever you pay a sales tax to produce a good or service, that becomes a part of your cost. Therefore when you sell that final good or service you have add additional tax onto to it. Under the GST, the tax that you paid, which is your input tax, is used as a credit and should not be included in your mark-up; therefore you do not charge tax on it.?
Janelle Chanona
?It seems like the brunt of this will be on the consumer at the end of the day and the businesses acting as agents, will just be passing it on.?
Godfrey Arzu
?The intention?and I explained that in my presentation?the intention of the tax is that it will be borne by the final consumers. But you have to understand consumers shop around and therefore the businesses will be ill advised to take advantage of the consumer, cause they will shop around for the lower prices. Therefore, the market forces should dictate the prices.?
Under the new tax system, several other levies will be repealed, such as the: current Sales Tax, entertainment tax
speculation fees, stamp duty on receipts, export duty on scrap metal, and estate duty.
There are approximately fifteen categories of zero rated goods and services including basic food items like rice, sugar, milk and flour, agricultural inputs, select medicines and supplies, and goods and services for export. Exempted goods and services include financial services like banking and insurance, residential rents, public water supply, and education.
According to the GST team, input taxes paid on zero rated goods/services become a credit. However, input taxes paid on exempted goods and services become a cost to the business.
Sounds complicated, but according to Assistant Commissioner of Income Tax Marilyn Ordonez, proper accounting should clear up the confusion.
Marilyn Ordonez, Asst. Commissioner, Income Tax, GST Team
?They need to account for it properly. They will need to issue tax invoices which would clearly show the taxes on the invoices. They should not charge the GST on their mark-up, on the GST that they pay. The GST should only be charged on the cost of the good and the mark-up, not on the good, plus the mark-up, plus the GST that they paid. It?s essential that they don?t charge GST on GST, alright. That is the one main feature of the tax so we avoid any cascading; the tax must be charged only the product with the mark-up.?
Janelle Chanona
?If somebody was charging GST on GST, you would know about it??
Marilyn Ordonez
?Yes, because we?ll be doing audits. We should have, from the very beginning of the implementation we?ll be having auditors going out to look at records to ensure that it is properly accounted for, properly charged; that the invoices are in order.?
I think that cleared things up, but how did participants feel?
David Heredia, Hotel Owner
?I have a business in Caye Caulker as a hotel and I also have a business here, plastic packaging supplies company, we sell plastic bags. So we do a lot of importation.?
Janelle Chanona
?How do you feel after you?ve gotten this information from the GST team??
David Heredia
?I just feel like that might bring additional costs to the consumer, but at this point I?m not so sure.?
Janelle Chanona
?You have to go back and go through the material??
David Heredia
?We got to go back and study it carefully.?
Errol Robateau Jr., Consumer
?There are a lot of things that are still uncertain at this point. The tax will require perhaps a lot of burdensome work to keep track of inputs, outputs. One of the things that concern me is the issue of electricity and phone bills. They say they will charge ten percent on phone bills; currently it?s eight percent. So that?s another issue that I?m concerned about as a consumer. So a lot of things still up in the air and I think we need to look it carefully before we pass it.?
Reporting for News 5, I am Janelle Chanona.
The threshold for registering for the General Sales Tax is currently set at seventy-five thousand dollars per annum in gross sales or six thousand, two hundred and fifty dollars in monthly takings. A second G.S.T. forum will take place in Belize City on the nineteenth of December at the Coastal Zone Management Authority and Institute. On the fifteenth, sessions will be held simultaneously in Punta Gorda and Spanish Lookout. Officials will then head to Independence and Placencia on the sixteenth for additional presentations. We understand tonight that the House Committee will be meeting on the General Sales Tax on Monday in Belmopan.
