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The likely shortage of money

Oct 08, 2009 Editorial

The pace of development is often slowed by the flow of money. In Guyana, more often than not, the money comes from the revenue collected by the government. This money is in the form of foreign aid and taxes. The budget for this year indicates that almost eighty per cent of the national revenue will come from taxes. And the bulk of the taxes comes from the Value Added and Excise Taxes which came into effect in 2007 as a means of broadening the tax net. Ironically, over the years, the government had been saying that once the tax net is expanded then the captive taxpayers would get an ease. For example, public servants pay one-thirds of their salaries after certain deductions as taxes.

They have no chance of escaping because their money is paid through the public treasury and such deductions are mandatory. These were the people who were to get the ease. Rice farmers, millers, taxi drivers, certain categories of self-employed people and even some of those who own property were among the main non-taxpayers. With the introduction of the Value Added and Excise taxes, these people were bound to pay a fair share of the taxes. They had to buy fuel and other accessories necessary for the rice industry, they had transportation costs that motorists attached to their charges and of course, they had to visit the shops for their sustenance. VAT and Excise tax far exceeded budgetary expectations but the tax on the ordinary people still remains exceedingly high. The government says that it uses the surplus collected to help the working people. This money went to pay for certain things such as increases for public servants who earn less tan $50,000 per month; cost of living increases when the global economic crisis hit; and undertake certain community development projects. But if the truth be told, people prefer to spend their own money.

They would have priorities that the government can in no way determine from individual to individual. This may be the main reason why people see the new taxes as a burden. But for all the money it collects by way of taxes, the government simply cannot perform repairs to the crumbling sea defence, repair major thoroughfares, provide a sophisticated potable water system or offer the kind of electricity that the nation needs without external help in the form of loans or grants. Any country that has substandard communication—either inadequate roads or poor telecommunication—inadequate electricity and things that people in most countries take for granted then the country is considered backward. Guyana has been caught up in this situation and is seen as backward largely because of its land space and its pockets of population away from the coastal belt. The major donors have been helping but in recent times we have noticed a scaling back in the level of help. The official position is that Guyana is not as bad off as others caught up in the global economic crisis so the money that would normally come to Guyana has to go elsewhere. The Americans did just that with the PL480 wheat when it was really angry with Guyana. Others did the same for their own reasons but they used the global economic conditions. In one case the Inter American Development Bank withheld a loan because of a legal challenge by a local contractor. He had lost a tender bid and he felt that he was being victimised.

That project is still to be executed because the money has been withheld by the international donor. In certain corridors, we hear that money is not coming as it once did because of an absence of accountability. The government has not admitted to such a reason for the international community to withhold funds but it has admitted that international funding has not been what it should be. The World Bank, the Indian, Chinese and the Japanese Governments have all moved in to fill the breach but despite their best efforts the volume of money needed to take Guyana forward is still greater than their combined contributions. Remittances that provided a lot of support have been cut because of the global economic crisis. Further, the nation has lost money as a result of the change in the sugar protocol. Things can only get better.

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