VAT? Now what is that?

It is an issue over which the Government's think-tank has been mulling for months. Medical shops in the city downed shutters last week over it fearing the worst. The rest of the trading community is also preparing to take up cudgels against a perceived threat to its business interests.

The VAT, or Valued Added Tax, has suddenly become a much-dreaded three-letter acronym in the public domain. Despite its phonetic resemblance to what in local parlance stands for a heady illicit brew, VAT actually represents an all-important, almost epochal transition to a spanking new taxation regime.

No one is precise about the implications of the VAT regime, but already its very mention creates a panic over a possible across-the-board spurt in prices of commodities in this predominantly consumer-State. This, in spite of the Government's intermittent reassurances that consumers only stood to benefit from the VAT regime.

``We have tried to ascertain the implications of VAT from some officials, but we have drawn a blank," says a medical shop trader, who also feared that the regime would in effect leave chemists at the mercy of hawkish Sales Tax officials.

Curious readers have started browsing libraries for anything that can enlighten them on the enigma. In one book, `VAT- A Practical Handbook', the author, David Lee, starts off with the following preface, "VAT was introduced as a simple tax. Income Tax was introduced as a temporary measure. The `Titanic' was introduced as an unsinkable ship''...

To quote the author, VAT is an inescapable part of European community life. Businesses charge it, consumers pay it. In fact, whichever business you are in or wherever you are, your activities are subject to this unified tax regime. We are told the official literature on VAT in the U.K. and related regulations run into well over 100 publications. Some of these can be easily understood, while others require time and a box of headache pills before their secrets can be learnt, according to the author.

``Yet, ignorance is never accepted as an excuse if you make a mistake. There are no prizes for getting your VAT right, but financial restitution together with penalties, surcharges and interest is demanded from those who get it wrong," says Lee. Meanwhile, confusion continues to reign.

By Dinesh Varma M.

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