Thursday, July 21, 2005

Privatised Sales Tax

Did you realise that a private company may levy sales tax (or VAT) on every purchase that you make, including foodstuff and medicine, which are exempt from Government VAT ? I realised that when I went to purchase medicine from a pharmacy. I saw a credit card reader on the counter. I asked the pharmacist how much the bank was claiming for the use of that credit card facility - he answered: 3%. Imagine if the government collects an additional 3% as VAT, everybody would grumble. Yet when a private firm does that, nobody finds it shocking. Banks used to earn a percentage on money lent to you; now they earn a percentage on every transaction.

Considering that most tourists pay with credit cards, and that the tourist industry is one of the biggest in Mauritius, what a huge amount of money collected for just changing the mode of payment from paper to electronic!

This is no different than Sales Tax collected by a private company.

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