I WANT MY MONEY BACK!

Dec 15, 2014 Features / Columnists, Peeping Tom

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If you have a savings account, the bank every few months, sometimes quarterly, sometimes half yearly, usually gives you interest on your bank balance.

When they do give you the interest, they add it on to your balance which logically increases. But you would note that before they add on this balance they take out what is known as a Withholding Tax which they have to hand over to the government. In this regard, the Withholding Tax is one way in which the government taxes the interest that you obtain from your savings. It is not the savings that is taxed but the interest that you earn from the bank. The Withholding Tax is 20% and also applies to interest earned by companies.

The Marriot Hotel is not going to have to pay any Withholding Tax on any interest earned. This is unfair and unjust because the other hotels in Guyana should enjoy the same treatment.

When any of these other hotels finish tallying their accounts at the end of the year, they are required to pay what is known as Company Taxes. The Company Tax, I believe, for commercial companies is 40%. It means that the hotels in Guyana, after they would have declared their profits, have to hand over 40% of their profits to the government. In the case of the Marriot, however, it does not have to hand over a cent for the next ten years. This is unfair and unjust and gives the Marriot, built with taxpayers’ monies, the ability to put the other major hotels out of business.

But it does not end there. After a company would have declared a profit, it has to decide how much of that profit it is going to distribute to the various owners of the company. This payment is known as a Dividend. The reason why persons invest in companies is so that the value of their shareholding can go up as the value of the stock of the company increases, and they also earn a return on their shares which is the Dividend. If the company does well, the Dividend to the shareholders increase.

Now, for non-resident shareholders, there is a requirement that this Dividend has to be taxed. This is called the Withholding Tax on the Dividend.  Not so with the Marriot Hotel. The foreign shareholders are for the next ten years not going to pay a single cent in Withholding Taxes on their Dividend. They are exempt from this tax as part of the deal they have with the government.

In the case of the Marriot Hotel, this is obscene because as we know this hotel is being primarily constructed with taxpayers’ money. As part of this controversial deal, two small investors are said to be investing only US$8M in a hotel worth more than US$50M, yet with this minority investment, these foreign investors will have a majority shareholding, because the bulk of your and my money which is being pumped into the project in the name of the government is going as loans for which no interest is going to be paid for a long time.

Whoever are the lucky two investors have gotten a “sweet man deal.” They will therefore cream off the bulk of any Dividends which are declared. This is an obscenity in itself but what makes it stink to outer space is despite being able to cream off the bulk of the dividends, these foreign investors in the Marriot Hotel deal do not have to pay this tax on their dividends.

But to add insult to injury, the Marriot is allowed a one-off retrofitting of the project. This means that they can change or upgrade anything in the hotel and not have to pay any taxes. What this means is that if the Marriot sees that the Pegasus has made some renovations and the Marriot decides to do the same or better, they do not have to pay any taxes on the upgrade. But the Pegasus will. How can this be fair to the other competitors in the industry who are not as fortunate as Marriot to enjoy such generous tax concessions.

With this slew of concessions, the Marriot is not going to just corner the up-end of the market. They are going to corner the entire market and throw all the other major hotels into bankruptcy.

The more I read of this Marriot deal, the more I keep looking at my bankbook to see the few pennies which I have so diligently saved over the years. When I look at my bankbook, I keep seeing that every time I get a dollar in interest, the government gets 20 cents in taxes. Every time I get $100 in interest, the government creams off $20, leaving me with $80.

I am now demanding that the government repay me every dime that they have taken as Withholding Tax from the interest earned on my savings.

If the government can give such generous concessions to the two multimillionaires who will hold the majority of shares in the Marriot; if they can do this for ten years and possibly more after, they can damn well return the Withholding Taxes they took out of the interest I earned on my savings. I want it returned. And I want it returned now!

 

 

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