1. The Goods & Services Tax (GST) (formerly VAT Experience Presented by: Mr Paru Elliott (Principle Advising Officer)

2.  National Government and Internal Revenue Commission decided to introduce the VAT (now GST) in 1996 as an initiative to neutralize the economy, maintain equitability across the taxpayer population (tax burden shared across the country) and eliminate tax avoidance.  The VAT also encourages businesses to save  VAT introduced replaced the Sales Tax collected by the Provincial Government and supplement the reduction of customs tariff.  VAT Act was enacted in 1999.

3.  The VAT concept was floated around within the Government circles in 1996 and eventually implemented in 1999. PROCESS: Step 1. Political Support (Lobby with Members of Parliament and Governors to support bill) Step 2. Once bill was approved by Parliament IRC officials were briefed. New Zealand model was considered to be appropriate thus NZ experts were engaged to implement VAT..

4. Step 3. IRC met with business houses for comments and input to the VAT system. Step 4. Awareness campaign with the taxpayer populations. All centres were visited. Step 5. VAT implemented after three (3) years of vigorous taxpayer education and awareness

5.  More revenue generated by IRC.  The VAT now GST had distribution made to provincial governments with minimal compliance costs.  Less emphasis placed on few taxpayers targeted (e.g. Income Tax taxpayers).

6.  Input and Output tax components thus VAT burden is passed down to consumer and this inflates the prices of goods.  Flat VAT/GST rate of 10%. The rich and poor pay the same rate of tax therefore not equitable to the poor.

7.  VAT considered null and replaced by GST in 2003.  The initial VAT concept was to have equal distributions to all provinces depending on the each province’s populations. The distributions have been changed, based on how much GST is collected from a particular province.