Income tax threshold heartless and unjust

May 21, 2009 Letters

Dear Editor,
The fixed tax threshold that makes no provision for dependant allowances is unconstitutional, heartless and wrong. I am forced by the law of necessity to address this human rights violation by the state.
It is a constitutional breach, and an unjust system of taxation which was created to rob our people of their hard earned money. I consider it a white collar crime by the state.
In the late 1980s after the death of President Forbes Burnham the PNC government had introduced an economic recovery programme, the ERP, which was the handiwork of the IMF and the World Bank, and approval by them.

Before the ERP was introduced our country’s external debt was about US$360 million and our currency exchange rate vis-à-vis the US$ was ten to one. There was a shortage of imported foodstuff, spare parts, and essential services in our country during that period. In order to have goods and services available again, the PNC had to borrow large sums of money which eventually created a $2.2 billon external debt burden. Then to have these debts repaid, the IMF and the World Bank advised the then Government to collect more taxes. In the pursuit of the PNC to collect additional taxes, the then administration introduced a fixed tax threshold which prohibited parents and guardians from applying for dependant tax allowances for spouses and children.

This was an unjust, unreasonable and unconstitutional innovation. The law took away the right of spouses and children to live free from hunger as required by Article 40 of the Constitution of Guyana. It also violated Article 38 D which provides for the right of every child to have maintenance and accommodation from their parents or guardians. While the $35,000 a month income tax threshold may be reasonable and just for an individual, it is unreasonable and unjust for an entire family. We must have tax allowances for our wives and children. The government must be made to understand the plight of the masses of poorly paid Guyanese, and revert to the former system through which allowances were granted for all dependants.

If a man refuses to provide for the welfare of his children he can be taken to court and be jailed. This means that expenses related to the upbringing of children are the expenses a parent or guardian must raise above all else; it therefore means that the authorities must appreciate that dependant allowances must become part of the tax system so there will be some sort of consistency with the income tax law and the social welfare laws. In the business sector, Income tax is charged after the expenses of a business are covered, and it should be applied when the expenses of a family are covered.

In the past, before dependant allowances were removed, the basic living expenses of families used to be covered before the income tax deductions were considered. But now it is only the working person’s basic living expenses that are covered by the income tax threshold, and that excludes rent and utility bills.
In reality, the $1,150 per day can only provide basic foodstuff for a person, and that’s much less than the cost of snacks used by Parliamentarians when they meet for a few hours. The fixed tax threshold may also create many social problems such as fewer legal marriages because there is no incentive for family life from the state.

It also encourages a system of ‘runnings’ so that the poor people of this country have to resort to creative ways of surviving, while those who can afford to pay their taxes are offered a host of exemptions.
The arguments for the approval of the law that introduced the income tax threshold and removed the dependant allowances were false all along. One argument was that persons had been submitting false birth certificates to claim parenthood or guardianship for children, and that the Inland Revenue Department could not have coped with the task of maintaining the checks and balances to determine the validity of documents submitted. Today we have computers to check millions of documents per day. What will be the argument now? The PPP also voted to pass this unjust law and never made an effort to change it since that party took the reins of government in this country.
Government functionaries preach about the right of the child but do not want to grant any allowances for children.

The current income tax law constitutes a crime against our wives and children. The Government has no shame. The administration is implementing laws that will give government officials big pay and benefits out of the tax payers’ money when they demit office. I hereby ask His Excellency President Bharrat Jagdeo to make a statement on this issue. I hereby ask the private sector and the business community to join in this fight for a better tax system.

Let us fight for an income tax allowance for at least $4,000 a week for each child who is a minor and $7,000 a week income tax allowance for wives. People have to stop being afraid to speak up for their rights. Do not be afraid! You have the power to fight and change a bad system.
Let your voices be heard in the deaf ears of the government. My advice to the government is better to charge 8% VAT on all VAT-exempt items to cover some of the losses which will be incurred by the re-introduction of dependant allowances, rather than demanding 33 percent on earning that exceed $35,000.
Michael Carrington, AFC Region Four Councilor