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Loggers “reject” VAT on lumber; appeals for restoration of concessions
The Forest Products Association (FPA), an advocacy body whose members include some of the country’s biggest loggers, has expressed alarm over what they describe as an imposition of the Value Added Tax (VAT) on
Loggers are appealing to government not go ahead with plans to introduce 14 percent VAT on forestry products.
local products.
“The FPA is very concerned and alarmed at the recent imposition of VAT on lumber at all stages in the production chain, be it intermediary or final sale. In addition, locally produced items including plywood is also subject to VAT. Previously there was no VAT on final sale of lumber and plywood,” the association said in a statement.
The VAT will drive up local price for lumber, which is popular in construction.
FPA noted that this latest challenge would come after the administration has also removed the VAT-free concession on equipment for forest-related activities.
“Further the concession whereby if 50% or more of your products was exported you would have been exempted from VAT has also been removed. These measures are very punitive, anti-development and frightening for the forest sector.”
The association noted that its members who have been in possession of forest leases have for decades been good custodians of the forest resources.
“Today, our forest remains in a pristine form despite decades of forest harvesting. This is a true reflection of FPA members and the body as a whole practicing sound forest management and in keeping with national laws and guidelines.
The forest sector is one of the most regulated sectors in Guyana following high international standards and the FPA has been in the forefront embracing these standards and in compliance.”
This has resulted in Guyana receiving payments from Norway for keeping the local forests in pristine conditions.
“Further benefits and in simple terms, the Success of Government Green Development Plan, rest soundly on good forest management compliance. The FPA embraces and support the GOG Green Development Plan.”
FPA pointed out that payments received from Norway through good forest management is close to US$50M per year and this is used to support Government’s social services, and Amerindian Land Titling, among other things.
The association noted that the forestry sector employs directly and indirectly over 20,000 local Guyanese.
This accounts for annual production which ranges between 400,000 to 500,000 cubic meters and export earnings of between US$40M and US$50M.
The producers are also responsible for the construction and maintenance of thousands of kilometers of interior roads. These are not only used by foresters but miners, private sector, government and others.
FPA insisted that the VAT introduction will have a number of crippling and negative impacts.
“It would make our products uncompetitive and lead to a virtual shutdown of the sector, mass unemployment in particular Amerindian communities and of other persons living in the interior.”
FPA said the VAT will also put at risk the Government Green Development Plan and the ability to access future funding from carbon schemes.
It could also have the potential to increase illegal logging and deforestation and forest degradation and thus endangering the Green Development Plan and access to future carbon funds.
With reduced activities, hinterland roads and other infrastructural maintained by forest operators will be threatened also.
The VAT introduction will also see a reduction in production and export earnings leading to a foreign currency shortfall.
FPA also complained about the rise in the importation of pine lumber which has been sending a negative signal to the international community about the country’s standing forest.
“The FPA is urging its members, concession holders, small producers, loggers, saw millers, lumber yard operators, furniture manufacturers, workers, suppliers, private sector, the business community, house building consumers and all Guyanese to join forces with them to engage Government for the removal of VAT on lumber, and other forest produce and restore other concessions relating to VAT exemptions,” the release from the association said yesterday.
Last year, the forestry sector contracted over 30 percent, principally as a result of Barama halting the production of logs and the UK’s restriction on greenheart logs originating from Guyana.
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