Our tax system is inequitable

Nov 18, 2022 Features / Columnists, Peeping Tom

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Kaieteur News – A single-parent teacher has reportedly appealed to the President to waive more than $300,000 in taxes, interest and penalties assessed as being owed by her to the Guyana Revenue Authority. The teacher apparently does a part-time job and the additional taxes were accrued due to the additional source of income from the part-time job.

The appeal for tax relief by the teacher has touched a raw nerve within society. As the publisher of this newspaper has suggested in his recent Tik Tok video, it points to the inequity of our tax system.

According to Glenn Lall, the large gold mining and oil companies operating in Guyana are fetching out our gold and our oil respectively and are not subject to corporation taxes. But this poor teacher, struggling to make ends meet, is forced to take a part-time job, only to have to pay more taxes. Unlike local and foreign businesses she does have the liberty of asking the government to waive all her taxes. She is an individual taxpayer and not a member of the bourgeois class and thus is not entitled to a fiscal incentive agreement like the ones recommended by the Guyana Office for Investment (GOINVEST).

GOINVEST has become a concession factory. Businesses, large and small, apply to that investment promotion agency seeking concessions for their operations. Based on an agreement which they sign with the government extremely generous concessions, including on vehicles, are granted to many businesses. The value of those concessions is estimated at billions of US dollars each year. The Auditor General has pointed to the massive increase in concessions and exemptions on account of investment agreements between businesses and government.

Under the Production Sharing Agreement (PSA)  between the oil companies and the government not only are most of taxes of these companies, including corporation and import taxes, waived but whatever taxes are due have to be paid for by the Government of Guyana. What can be more vulgar than that. Recently, the President of the Georgetown Chamber of Commerce and Industry reportedly called for local businesses to enjoy greater parity with their foreign counterparts when it comes to tax concessions. He was reportedly taken to task for saying this.

Years ago, when Yesu Persaud made a similar call, he too was publicly castigated. The authorities rather than addressing the problem of tax inequity are instead turning a blind eye to it. It is ironic that an investor can go into GOINVEST and negotiate tax concessions under fiscal incentive agreements, but a hard working teacher, seeking to make ends meet has to appeal to the President to waive the taxes, interest and penalties assessed by the Guyana Revenue Authority.  The President has the authority to direct GOINVEST to support an investment proposal. But he has no powers under the law to waive a mere $300,000 in taxes and penalties of the teacher. This shows the extent to which the tax laws cater for the rich to the disadvantage of the poor.

That teacher should not bother to write to the President. He has no powers to waive her taxes, however much he might wish to do so. She should instead write to the Head of the Guyana Revenue Authority asking for a waiver of the penalties, interest and late fees. But she will have to pay the taxes which have been assessed because she is not one of those companies which enjoy fiscal incentives agreements exempting them from taxes.

A country cannot be run without taxes. People should be encouraged to pay their taxes. The income tax structure is slanted in favour of low income workers. Below a certain threshold, no taxes are payable and each year, there are pressures placed on government to increase the tax threshold. Thousands of low-income workers do not pay any taxes and this should never be the case. Everyone should pay taxes but the rate of low-income workers should be kept low. In other words, there should be a progressive tax system in place in which as a person income increases the income taxes her or she pays should also increase.

But the GRA also has to appreciate that its system of penalties, interests and late fees are too punitive and prohibitive. The country is now emerging out of pandemic and the least the government could have done was to grant a limited amnesty for penalties, interest and late fees so as to encourage people to pay their taxes. When these interest, fees and interest are compounded with the taxes owed, it serves as disincentive for persons to settle their indebtedness.

But while the government will not consider a limited amnesty for penalties, late fees and interest, it will continue to grant tax waivers to companies, large and small in Guyana. All this does is to perpetuate the inequities in our tax system.

(The views expressed in this articles are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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