I do not know of any country where Exxon did not pay corporate taxes on its profits

Jul 27, 2021 Letters

Dear Editor,

Kaieteur News – Some time ago, Professor Ganga Ramdas, reminded the public that Exxon does not pay taxes on revenues earned or profits (12.5% of money generated from sales of oil). Had it paid taxes, that money would have been available for a lot of social welfare services such as doubling pension payments or free education for all.
Dr. Ramdas did not make a very strong, convincing argument on why Exxon should or is required to pay taxes. Those of us who studied economics know that taxes are critical for an economy. Taxes are used to pay for workers and services that governments provide to communities – in short, to run the government. Government has to pay politicians, administrators, bureaucrats, civil service, clerks, police force, army, emergency forces such as firefighters, public hospitals, doctors, nurses, engineers and maintenance workers for streets and buildings, and goods consumed by the government services. Taxes are critical to a country. But everyone seeks to avoid taxes while wanting the best services. Without taxes, these services cannot be made available as government need revenues to pay for them.
Those of us who study economics or taxes would know that all corporate businesses pay taxes on profits. Some investors get tax holidays as an incentive to invest. I do not know of any country where Exxon did not pay corporate taxes on its profits. But the PPP administration cannot be held liable or blamed for Exxon not paying taxes.
The APNU led government signed a very bad agreement (paying Exxon’s taxes) that in effect exempts Exxon from all corporate taxes. The government agreed to pay the investors’ taxes, a practice not known elsewhere. As Guyanese said, APNU led government gave away the entire store, saddling the PPP administration with this burden. The PPP has to honour the contract, which has a stability clause that it cannot be unilaterally renegotiated. Perhaps former Minister Raphael Trotman can explain why the government signed that lopsided contract. Who instructed him to sign it and why was the stability clause inserted in it?
It is not good investment policy to break agreements even if one gives away a store. But perhaps a way can be found to collect more revenues from licencing, etc., and even from taxes and local content policy. Guyana’s law on taxes essentially says a company or person pays taxes on income earned. None of the country’s laws says that the government can pay the taxes of an entity. It is not clear if a contract overrides the law; constitutional lawyers have to give clarification. When I taught economics years ago, I pointed out some creative ways how giant companies can be taxed through various fees. Companies can pay more taxes but it is up to parliament to make such laws mandating taxes or user fees. The PPP has done its best to enforce the contract while securing the interest of the nation. There are others who believe that the contract can be renegotiated; both sides have to agree to renegotiate the contract.
Just for clarification, royalty is not really taxes although some economists describe it as a tax. Royalty is income or a fee from use of property; Guyana’s oil and gas are national public properties, the use of which investors pay a fee. And revenues collected from Exxon including profit sharing is not taxes. Taxes are fees levied on income. Exxon is not paying taxes, as Dr. Ramdas correctly stated. A company’s interest is to minimise taxation while government’s interest is to maximise tax collection. The previous government should explain why it signed an agreement that is against the country’s interest.
Yours truly,
Dr. Vishnu Bisram

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I do not know of any country where Exxon did not pay corporate taxes on its profits

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