On Thursday in the National Assembly, Minister Stanley Raghoebarsing of Finance & Planning carefully selected phrases to convey the need for the VAT legislation amendment. When this law was first introduced, errors were made that now need to be fixed. Instead of 38%, the product’s tax base should be 60%. Several Assembly members, though, were unimpressed with the minister’s address. “Surrender is what it is all about. A bald chicken has no feathers, according to BEP group chairman and tax specialist Ronny Asabina. The International Monetary Fund (IMF) has a prerequisite for a favorable assessment: the VAT law reform.
NDP leader Rabin Parmessar has already reported that if things do not change drastically in the law, it will not get the approval of his group. There is a lot of criticism that the VAT on fuel will be increased from 5 to 10%. It was argued by Parmessar that government take is still levied, while it has no legal basis. He also wanted to know how the price was built up at the pump.
Raghoebarsing explained that the calculation center of the Central Bank of Suriname has calculated that the introduction of 10% VAT has raised inflation by 1.1%. The increase in VAT from 5 to 10% will have an inflation effect of 1%. An inflation of 40% is expected for this year. The minister promised that the government will do everything possible to prevent undesirable effects. The poverty line is calculated again. A supplementary budget will also be submitted for this year, which will also clearly show social responsibility.
The approval of the amended VAT law is one of the conditions of the IMF for a positive assessment in mid-September. There were two prior actions. One had to do with the Central Bank of Suriname. This is now OK. The VAT law should be passed, broadening the revenue base. On a technical level, there is already agreement between the IMF and the government. This law is back on the agenda for today, with the expectation that it will be finalized.
In addition to holding talks with government officials, the IMF mission also held talks with the business community, the trade union movement, the coalition and the opposition, among others. Parmessar noted that it has been made clear to the IMF that the people cannot bear any more sacrifices. Too many burden-increasing measures have been taken in a short period of time.