WHAT NEXT WILL BE TAXED?

Nov 30, 2016 Editorial, Features / Columnists

In a speech that lasted more than three hours, Finance Minister Mr. Winston Jordan presented the government’s budget to the nation on Monday last, under the theme “Building a Diversified, Green Economy: Delivering the Good Life to All.” It was the third budget in 18 months and the earliest to be presented to the National Assembly since Independence. It is also the first budget in four decades to be presented before the start of a new fiscal year. The $250 billion is the largest budget in the history of the nation.
In the budget, there are plans for the future development of the country while simultaneously trying to solve the present problems and concerns of the people.
Acknowledging the economic problems the government inherited from the former administration, the Minister laid the foundation for the diversification of the economy away from the country’s traditional products of rice, sugar, bauxite and timber. He stated that it is not practical to sustain and maintain the sugar industry. To do so, would cost the taxpayers approximately $21 billion in 2017 and $22 billion in 2018.
That said, there are many good things in the budget. It proposes transformative actions to deal with the complex issues facing the country and create a robust and resilient economy that transcends the traditional patterns of growth. It addresses the critical functions of economic and financial management as well as the effective implementation of government’s policies. Although the economy grew at a dismal 2.6 percent growth rate in 2016 and not the anticipated growth rate of 4 percent, yet the Minister projected a 4.4 percent growth rate for fiscal year 2017.
With regard to taxes, there are too numerous to mention. They include the lowering of the corporate tax from 30 percent to 27 percent, increasing the tax threshold from $55,000 to $60,000 and raising the old age pension from $18,500 to $19,000.
The budget also made several provisions, including the installation of solar panels in the interior areas of the country and the completion of the road from Linden to Lethem, among others.
While these are some positive elements in the budget for which we should be justifiably proud, there are some negative ones that are appalling to the people. The good news is that VAT has been reduced from 16 percent to 14 percent in keeping with the APNU+AFC coalition’s manifesto. However, the bad news is that VAT is now payable on the consumption of water in excess of $1500 per month and on electricity in excess of $10,000 per month. While the average citizen will have to pay VAT on their electricity and water bills above a certain level, the Value Added Tax on business has been reduced to 14 percent. It is a move that has left many peeved.
Minister Jordan’s announcement of VAT on electricity and water was met with shouts of betrayal from the opposition in the National Assembly. It is rather sad and unfortunate for some to think that the only thing left for the government to tax is the air they breathe.
Several ministers commented on the positive aspects of the budget and in doing so, they have ignored the impact of the consumption tax of water and electricity on the people. It shows that they are out of touch with reality, because taxing water and electricity adds to the financial burden of the citizens, at whatever level.
The Minister has every right to paint a rosy picture of the economy and the country in the same way the leader of the opposition labelled the budget as the worst in the history of the country. Mr. Jagdeo claimed that the proposed tax measures in the budget would wreak havoc on the people. There were howls of dishonesty, mismanagement and corruption from the opposition during the presentation of the budget in Parliament.
If this is a sign of what to come, then the nation should brace itself for an explosive and ferocious debate in the House.

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