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Guyanese taxes pump four times more $$$ into economy than oil
The Liza Destiny FPSO producing Guyana’s oil in the Stabroek Block
Kaieteur News – Guyanese over the past five years would have been regaled with promises of a better future, living a life on par with the likes of those in oil rich Abu Dhabi, but the country’s main source of revenue continues to be taxes paid by workers, companies and domestic transactions.
Earnings from the country’s first year of oil production have seen returns on its crude accounting. But this is less than a quarter of what was collected in taxes from a population of less than one million people.
Government last year collected $218B in taxes, but received a total of $53B from its sale of just over five million barrels of oil and a two percent royalty on production.
According to the Ministry of Finance’s budget estimates for 2021, the Government is looking to rake in even more taxes from Guyanese workers and Corporations this year, projecting $242B in returns.
Personal Income taxes (PAYE) paid over to government accounted for $34.6 billion in collections last year with the government projecting receipts this year, to surpass $37.8B.
This, in addition to the projected $38.2B government aims to collect this year from ‘Company Income Tax,’ an increase from last year’s $72.2B.
While a reduction in the rate of Value Added Tax (VAT) charged saw revenues declining last year to $83.8B, the Guyana Revenue Authority (GRA) is aiming to collect $93.7B this year.
According to the figures outlined in the 2021 Estimates, Non Tax revenues including Rents, Royalty and Land development schemes is expected to bring directly to the treasury $3.2B.
Monies accrued from the sale of Guyana’s oil however, is deposited into the Natural Resources Fund (NRF) held in the New York Federal Reserve, and not directly into the treasury, with disbursements to be made utilizing special rules promulgated under its substantive legislation—to be amended, as proposed by the current administration.
Under the Production Sharing Agreement (PSA) signed with ExxonMobil Subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) and its partners—Hess Corporation and China National Offshore Oil Company (CNOOC)—the country will share profits 50/50, minus royalty and cost oil.
Notably 75 percent of production is being set aside monthly as cost oil, to be used in the production of oil from the Liza Destiny Floating, Production, Storage and Offloading Vessel along with making repayments on the operator’s investments.
The two percent royalty accepted by Guyana under its PSA with the oil consortium, in addition to the absence of a breakdown of information on what constitute(s) cost oil has been long criticized domestically and internationally by experts in the field.
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