Sunday 17 May 2015

Taxation - David Trottman


This is the usual modus-operandi for the tax them to death “blood out of stone” PNP Government.  Like GCT this tax approach is flawed.  Kill the “sitting ducks” and forget the rest.  However, unlike GCT this tax will not have to be absorbed as an input cost but as PwC pointed out will have serious cash flow consequences for the service providers. 
 
By way of illustration, consider the GCT business environment as a huge tree with a trunk, several major branches and a vast expanse of minor branches and foliage out to its extremities.  The way GCT is supposed to work, it is the “foliage” (end-consumer) that should ultimately be left hugging-up the GCT.  However, because the GCT system is an “open loop” and there is no way to audit out to the extremities, the folk in the trunk and big branches (manufacturers; major distributors and similar value-adding elements) become sitting ducks for the tax them to death PNP Government.  Although GCT in many cases is unrecoverable, and has to be treated as an input cost by the productive sector, make no mistake, the end-consumer ultimately still bears the cost in higher prices; the country however suffers in terms of competitiveness in a global economy.
 
The real news with GCT is that the “open loop flaw” and the “law of diminishing returns” combine to limit its usefulness to squeeze additional blood out of that stone, hence the desperation to find a few more sitting ducks like the motorists, property owners, JPS and telecoms customers and financial services providers with this ill advised thin edge of the wedge withholding tax.
 


The gas tax and other burdens on the transport sector have already forced personal mobility to the “survival trip rate” with damaging consequences for the economy.  Is anybody tracking transport demand which is a “leading indicator” for where an economy is heading.  Ka-BOOM Nicodemus!!!

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