BUDGET 2021: Gov’t reduces water rates; removes VAT from basic food items

As part of the measures in the 2021 National Budget, the government has announced a reduction in water rates and the restoring of the Value Added Tax (VAT) zero-rate on basic food items and household necessities.

Recognising that water is essential to all aspects of daily lives, both at the residential and the commercial level, Finance Minister, Dr Ashni Singh announced a five per cent reduction in water rates across the board, targeting all levels of consumers.

In addition, Dr Singh said the government will restore to the zero-rated status on all of the food items and other basic household necessities that were previously zero-rated at the time it demitted office in 2015.

These items include basic wheaten flour, basic breads, oats, unflavoured cracker biscuits, cooking oil, locally produced bed sheets, and pillowcases, and toothbrushes among other items.

The Finance Minister reminded that during the PPP/C’s tenure in government prior to 2015, an extensive list of basic necessities was zero-rated so as to ensure that the VAT.

He said this was to ensure that VAT did not lead to an increase in the cost of goods and services or become burdensome on taxpayers.

“However, the APNU/ AFC over their term in office moved a number of these items from the zero-rated category to either the standard-rated or exempted category,” Dr Singh observed.

He said the reversal was in fulfilment of one of the PPP/C’s manifesto promises.