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GOLD SMUGGLING

Aug 28, 2015 Features / Columnists, Peeping Tom

I am not going to blow any fuses over the “revelations” that large amounts of gold were being smuggled out of Guyana to, of all places, the United States of America. I am not going to get drawn into the charges that this smuggling was part of a massive money laundering operation which has been uncovered by the United States of America.
I have learnt over the years to be mistrustful of the United States. This is a nation that is notorious for dirty tricks, including going to the United Nations with bogus evidence and informing the world that Iraq, under Saddam Hussein, had weapons of mass destruction.
I am going to be superstitious and question why the information about the gold smuggling was broken on a Wednesday.  The fourth day of the week has in recent times been associated with revelations of corruption under the former administration.
The only problem is that after these juicy stores about public malfeasance are dropped, not much is heard about the issue afterwards. A few weeks ago, for example, the country was regaled about gasoline being uplifted from GuyOil without lawful authorization. The persons who were accused of this act were even invited to settle their indebtedness. Nothing has been heard as to whether anyone did and what was the outcome of the millions of dollars alleged to have been pilfered.
One therefore has to be circumspect about this latest allegation about gold smuggling from Guyana to the United States. It is said that the gold was declared as scrap gold so as to avoid paying higher taxes in the United States. I have to take this aspect with a pinch of salt.
While it is admitted that gold in certain forms does attract duty while other types of gold do not, it would be difficult for any smuggler to get pass US Customs and Border authorities by declaring gold bars as gold leafs. The US authorities are not dummies, and if this was happening on the scale that it is alleged it was happening, persons would have been charged with an offence.
If as is alleged, money laundering was involved, the United States would not have the story breaking in Guyana. Those involved would have been brought to the Court in the United States.
The only reason gold is smuggled out of Guyana is because of the high royalties relative to what is charged in other nearby countries. If the Guyanese authorities want to stop the smuggling of gold, they should have long ensured that Guyana’s royalties are in line with that charged by other neighboring countries. If you remove the royalties on the gold you remove the incentive to smuggle.
Of course that is easier said than done, because the revenues lost have to be recovered from some other sources. It is better to recover the lost revenues at the front end of production, through a resource tax, rather than tax actual production, which acts as a disincentive for persons to declare the actual production they make.

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