Jagdeo accuses City Hall of no transparency in tax waivers to locals but fails to address oil companies $Billions tax giveaways – PNC

Nov 12, 2023 News

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Kaieteur News – The People’s National Congress Reform (PNC/R) has called out Vice President Bharrat Jagdeo for accusing City Hall of lacking transparency in tax waivers to Guyanese while failing to share information on the billions in dollars of exemptions being granted to companies operating in the oil and gas sector.

The VP had described the amnesty programme by the Georgetown Mayor and City Council (M&CC) as a source of corruption and called on the officers of the municipality to change their approach to offering tax waivers. The former President said there was need for greater transparency on the waivers being approved by the local authority body.

While responding to a question from this publication at its weekly press engagement on Thursday, Economic Advisor to the Opposition Leader, Elson Low underscored that the People’s Progressive Party (PPP) administration has taken an approach to the petroleum industry that demonstrates it has no interest in information sharing on such critical aspects relative to the developing sector. As such, Low said the same attitude could be expected as it regards the massive tax waivers being extended to petroleum companies operating here.

The most recent statistics by the Guyana Revenue Authority (GRA) for the year 2021 indicates that a whopping $208.9 billion or about US$1B in tax waivers were granted to oil companies that year. In 2020, some $107B or just over half a billion-USD in tax exemptions were approved by the GRA that year.

In response to a question from Kaieteur News on whether the Opposition believes there is enough transparency from government with regard to these tax holidays, Low explained that there is need for a quantitative breakdown on the tax exemptions being approved.

He said that while the 2016 Production Sharing Agreement (PSA) with ExxonMobil and partners specify the list of supplies that are free of taxes, Guyanese should be privy to details that illustrate how much was waived for each particular item.

“The tax waivers are specifically laid out so we have an idea of what exactly those waivers are. Now if there is a need for some quantification of the waivers that is something that could be done. Requests could be made to the government for information to quantify that,” Low shared. He however added that those requests are likely to be met with secrecy, as the government has been exercising this attitude on a range of areas in the sector.

As such, the Economic Advisor to the Opposition said, “It’s pretty ironic that he is talking about City Council.” Meanwhile, in response to a question on whether the Opposition believes that Guyanese should be privy to what the tax exemptions are being approved for, he noted, “Absolutely, that goes without saying, as it is the peoples’ money what we are saying is that the types of waivers that is clear, it’s the quantification of it that the government will resist putting figures to. That is where I think definitely the Guyanese people will look forward to more clarity there.”

The Opposition is adamant that there should be transparency in this area. “We believe that there should be transparency, we believe that it would be normal for Guyanese to be able to have an idea of the annual tax exemptions that exist across all operators in the oil industry. We believe in transparency so we would be happy to see those figures released to the public so that there is a sense of how that functions,” Low said.

Tax waivers to oil companies

For two consecutive years, the tax waivers granted to oil and gas companies in Guyana amounted to more than the country’s oil earnings.

It was reported that at the end of the fiscal year 2021 GRA granted approximately US$1billion in tax exemptions alone to the oil and gas sector, while the country earned only US$633.47M during the same period.

Similarly in 2020, Guyana’s new Extractive Industries Transparency Initiative (EITI) Report, for the year 2020 has revealed that the country earned a total of $93.77 billion from its extractive industries, comprising the oil, gold, diamond, bauxite, timber and fisheries sectors among others.

During the same period, the country however waived over $107 billion in taxes for the oil and gas sector. This means, Guyana lost more revenue in taxes than it earned for that year in its entire extractive sector.

Although the petroleum companies continue to enjoy the tax holidays extended through the lopsided 2016 deal with Exxon, the country remains in the dark on the sums being waived for specific items.

Article 21.1 of the contract stipulates that the Contractor as well as its sub-contractors “engaged in Petroleum Operations shall be permitted to import, free of duty, VAT or all or any other duties, taxes, levies or imposts, all equipment and supplies required for Petroleum Operations including but not limited to drillships, platforms, vessels, geophysical tools, communications equipment, explosives, radioactive sources, vehicles, oilfield supplies, lubricants, consumable items (other than foodstuffs or alcoholic beverages or fuel), as well as all items listed on Annex D.”

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• exemptions, oil, revenue, tax, Transparency

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