Fourteen recommendations for boosting the economy

Oct 21, 2017 Letters

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Dear Editor,
It is common knowledge that our economy has been contracting over the last two years. Among the evidence: the loss of the Venezuelan rice market due to an irresponsible approach by the Government; a flawed approach to the sugar industry, thereby directly jeopardising 20,000 jobs and indirectly affecting 1000s more; the scrapping of the Government housing policy, resulting in the decimation of the previously booming construction industry;
The list just narrated is by no means exhaustive. Against this dismal backdrop, the Government chooses to impose over the last 2 years, almost 200 new tax measures upon the backs of the citizenry. It is the latter upon which I now wish to focus. It is Sir Winston S. Churchill who once said, “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
Against such a depressing economic mosaic, we have witnessed an increase of every category of taxes on income, property, production, services, consumption, international trade and the introduction of VAT on a wide variety of items, which hitherto never attracted VAT. This has been coupled with a devastating increase in a wide variety of public licences fees, as high as 1000% in some cases and in almost every case, over 200%.
This astronomical regime of tax impositions and harsh fiscal measures have had, generally, a debilitating, and in some categories of household, a crippling effect, on disposable income. Consequently, thereof, there is a progressive and correlative reduction in the demand for goods and services and a wide spread inability to discharge financial obligations, further contributing to the cyclical downward slide of the economy, with the ultimate result being an increase in poverty and all the aliments associated with it.
While these measures have had an excruciating impact on the people, the Government has been reaping a windfall in revenue, increasing revenue by nearly $11B for mid-2017, when compare with the same period in 2016. When coupled with the savings that the Government ought to be making with the reduction in the price for oil on the international market, one of the nation’s largest expenditures, the billions that are accumulating at GPL, caused again, by the reduction in the price of fuel and the removal of subsidies previously granted to pensioners along with the imposition of VAT on electricity
Also hundreds of millions saved as a result of the scrapping of the $10,000 cash grant to every child in a public school and the school uniform voucher programmes; and the abolition of many similar poverty-alleviating measures, leave the Government with billions of dollars in revenue extracted in a depressing economic environment and from a population who have not received any proportionate increase in income over the same period. This unsymmetrical fiscal and economic matrix is a recipe for social disorder and chaos in any civilized society.
I believe that this disproportionate and unfair equation, for want of a better word, was recognized by the recently held Business Summit, hosted by the Private Sector. Hence, part of its quest was to seek “a compromise on an optimal taxation level and or tax incentives necessary for growth.” It is with a view of striking this delicate balance that I humbly offer the following recommendations for immediate implementation by the Government:
1.restoration of the regime of concessions and benefits previously offered to investors;
2. the remove of the imposition of VAT on zero-rated items, new fees and licences imposed in the 2016 and 2017 budgets;
3. the revocation of Order no. 18 of 2016, imposing VAT and reinstate schedules 1 and 2, which it revoked. This would include the following:
·the reversal of VAT on essential food items, ·the reversal of Vat on water and electricity, ·the revocation of zero-rate Vat for imports of household solar equipment, ·the removal of VAT on all educational goods and service, ·the removal of VAT on all pharmaceuticals and medical supplies, the reversal of taxes and fees on importation of raw materials for local manufacturing,·the removal of VAT on construction materials locally produced, ·the removal of VAT on agricultural, mining and heavy duty equipment, the removal of VAT on local products in the forestry sector, such as logs, shingles, wood, piles, etc, · the removal of VAT on materials and supplies used in the fishery sector, ·the reduction of VAT to 12% as promised by the APNU/AFC during the 2015 Election Campaign, ·the removal of VAT on purchases by Government Agencies.
4. the reversal of increase in fees for rental and drainage and irrigation in respect of state lands in Region 5 and other areas in the country;
5. the removal of the new taxes imposed on the mining sector – return tributors tax to 10% and remove the 2% final tax;
6. and the removal of tax on fuel for the agriculture industry;
7. the repeal of increase fees for motor vehicle licences;
8. the increase of the income tax threshold;
9. the restoration of the cash grant programme for every school children in public schools and increase it to $20,000 per child;
10. the restoration of and the increase in the uniform voucher programme to $4000 per child;
11. the reversal of the increase in tuition fees for the University of Guyana;
12. the restoration of the subsidy to pensioners in respect of GPL and GWI bills;
13. the removal of unconstitutional provisions in a series of tax and fiscal legislation enacted over the last 2 years;
14. the adopt and implement of the proposals, which are the subject of a Motion to be presented by the PPP in the National Assembly under the caption “Proposals to stimulate the economy, reduce poverty and hardships in the 2019 budget”, when it resumes sitting.
I feel compelled to say that I do not take much comfort from the Minister of Finance’s recent assurance that there will be no new taxes in the 2018 budget. It has escaped many that at that very press conference, the distinguished Finance Minister proceeded to assert that there has been no imposition of new taxes in his three budgets over the last two and a half years.

Anil Nandlall

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