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GPL, VAT & FARES

Nov 19, 2008 Features / Columnists

Peter R. Ramsaroop, MBA

INTRODUCTION
A modern market economy cannot exist in a vacuum. U.S. President Lyndon Johnson said “You know, doing what is right is easy. The problem is knowing what is right.”   To support themselves, governments must collect taxes, which in turn affect economic decision-making by those affected by those taxes.
Controversies have raged around the world, for more than a century, on the role that government should play in the economy. I believe the most basic function of government is to provide a framework of law and order within which the people can engage in whatever economic and other activities they choose.
The recent financial crisis has forced governments to get involved in bailing out private sector businesses. Here in Guyana, we have seen that many times with government having to bail out GPL. On the other hand, government has failed miserably running businesses.


GPL, VAT AND FARES
This week GPL paid GuySuCo over $100M for providing electricity to the grid.  There has been no public transparency on this transaction. How is this money documented?  What is GuySuCo charging GPL?  Are they making a profit when they charge us, the consumer?
This is a high number to be floating between two government-run entities without any accountability. We continue to pay high electricity bills without any reduction since fuel prices came down. Why don’t we see the government forcing GPL to reduce our electric bill to pre-fuel hike prices?
The forced reduction of minibus fares to the original prices was an unfair practice by government.  We want less transportation cost, but it is all relative.
Fuel prices have come down, yes, but prices for service, oil, tyres etc., have all risen. I support some reduction in the fares but not to the original prices.
In contrast, we have been lobbying very hard for free transportation for our school children, yet the government ignores this critical programme that will bring both a relief to our everyday cost and improve safety for our children.
They seem to rather focus on the heavy fist on us, without looking at ways, where they can truly help.
We have asked for a reduction in VAT given the cost of living increases, yet we have not seen the government move even one cent in this reduction, yet it forces operators to reduce their prices.
Last week England reduced VAT by 5%.  It is our hope that the minister who pressed for the minibus fare reduction can pressure his government to reduce other areas that affect our high cost of living.
As I have said before, all the officials of government have been in their jobs pre-VAT and pre-fuel price hikes, so they have never experienced the cost of living increases like we have, therefore there is no urgency to help us.


CONCLUSION
The EPA issue has gone into the quiet mode.  We will be glad we signed this agreement because we can actively court global economic players to acquire Guyanese interests in order to expand operation. This must be well orchestrated and not politically motivated.
Our nation holds massive opportunity for the minerals, tourism, transport, and agribusiness industry giants.  Why not actively pursue major investment in these areas.  If we have the resources and the businesses, these types of relationships should not be feared but rather welcomed as recognition of our vitality and capabilities. Both public sector and private sector alike should throw out the welcome mat to international investors and major companies.
This must not be done in isolation but in a well coordinated and integrated economic plan for our nation.
Working together with other private sector leaders over the course of the last few years, it has become apparent to me that we’ve got to reenergize and revitalize the spirit of free enterprise in Guyana.
With a healthy tolerance for risk, the optimism of the entrepreneur, and faith in the people of Guyana, we can build a private sector that will thrive in the CSME and work alongside Governments in their role as a support function.   In the meantime, GPL and VAT need to be lowered.  Until next time ‘Roop”.

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