GST – WHO WILL ACTUALLY PAY IT?

The content originally appeared on: The Anguillian Newspaper

In less than six months, the Goods and Services Tax (GST) will be implemented in Anguilla, and many persons are still confused as to who will pay the tax and how much it will cost them.

What we do know, from the Inland Revenue Department’s (IRD) brochure, is that “GST is a tax on the consumption of goods and services that will be charged on the value of imports and on the value-added (mark-up) on goods and services supplied domestically by GST registered businesses.

“From July 1, 2022, the GST will be implemented, and it will replace five existing taxes – Accommodation Tax, Communication Ley, Environmental Levy, Public Entertainment Tax, and Interim Goods Tax.”

So, who will actually pay the GST? The IRD’s brochure further states: “Businesses add GST to the price they charge when they provide goods and services.”

Minister of Finance, Dr. Ellis Webster, explained that businesses meeting the [EC$300,000] threshold have to register as GST businesses by April 1, 2022. Those businesses will charge consumers the 13% GST on goods and services.

Speaking at the Government’s weekly briefing on Monday, February 7, Premier and Minister of Finance, Dr. Ellis Webster, said: “At the grocery store, you will see on your receipt what the amount is for the 13% that the registered businesses [will charge].

“In terms of whether that should increase the cost of goods, we have always said it shouldn’t because the amount that businesses pay for GST (13%) is refundable, therefore it should not be passed on to consumers. There will be price control legislation that will come into effect, and supply officers will check to ensure there is no price-gouging and that businesses are compliant with the laws of the land.

“The way it works is that …the goods are imported; they go to the store understanding that there is a certain mark-up that is allowed and will be paid by the consumer. The government then refunds the 13%. If there is manufacturing, then it (GST) is added on to each stage of the manufacturing and then refunded. So, the number goes up at each level of the manufacturing – 13% of 100 [is one number] and 13% of 113 is another number. That gap – that increase is how government makes the revenue.”

Implementing a broad-based tax such as the GST makes it easier for government to predict its tax revenue for an upcoming year.

Premier Webster observed: “It’s more predictable in terms of what revenue is projected for each year based on the broad-based goods and serve tax.”

When asked whether consumers will pay part of the GST, the Premier said: “Certainly, a broad-based tax means that a broader part of the community carries the weight rather than it being on just one sector.”

So, if registered GST businesses – businesses reaching the (EC$300,000 threshold) – will pay the refundable 13% GST, consumers will pay the non-refundable “allowed mark-up” cost of goods and services AND the amount identified on the consumer’s receipt as GST, who will actually pay the GST, and how much will it cost them?