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‘Implement windfall taxes, it is a common practice in oil sectors’ – Dr. Vincent Adams
Kaieteur News- Former head of the Environmental Protection Agency (EPA) and member of the Alliance For Change (AFC), Dr. Vincent Adams told reporters on Friday that the government of Guyana should implement windfall taxes, a common practice within the industry.
Windfall tax is a tax levied by governments against certain industries when economic conditions allow those industries to experience above average or projected profits.
Former head of the Environmental Protection Agency (EPA) and member of the Alliance For Change (AFC), Dr. Vincent Adams.
Dr. Adams was asked by Kaieteur News to comment on the Vice President on November 29, 2024 statement that the government will not be instituting windfall taxes at this time, while the People’s National Congress Reform (PNC) is of the view that the conditions within the industry are not bizarre enough to have it added to the oil policies.
“This whole nonsense is just a bunch of excuses. Windfall taxes is a common thing, look how many countries, Germany, Britain, the United States…several countries have done it. So, this is nothing that this government (cannot do) …this is one of the mechanisms that they should be using,” said Dr. Adams who has over 40 years’ experience in environmental, petroleum and geological engineering.
Dr. Adams stressed that since the Vice President does not want to renegotiate the contract, this is an opportunity to be able to benefit from windfall taxes which, the government can have control over outside of the contract.
“But the guy [Vice President Bharrat Jagdeo] puts on this big bravado talk like everything else and finds excuses as to why we shouldn’t do it. This here is one of those that we have a lot of control over and there is precedent. Like I said a bunch of other countries have done it,” he lamented.
Furthermore, he explained that countries that have the mechanism in place are actually considering not removing the windfall taxes mechanism. Dr. Adams said that all the excuses that the Vice President has are “empty rhetoric to try and fool people as if he is pushing back on Exxon. If he wants to push back on Exxon, there are several different examples.”
On December 6, this publication reported that the People’s National Congress Reform (PNCR) said that the current circumstances within the oil industry are not bizarre enough to have the issue of windfall taxes included in their oil model.
The disclosure was made last Friday by Advisor on Oil and Gas to the PNCR Elson Low. Low told reporters that, “We have looked at the issue of windfall taxes and a couple of years ago, we made some remarks on this. The critical issue is that these oil agreements are based on some base assumptions, if those assumptions are violated then it will raise a question.”
He continued: “So, I would say that given that we are not looking at such a substantial change to the industry it’s not something that we are looking at. It is not something that we have raised in our oil policies. However, looking at our previous statements, it is only in a very bizarre scenario that we would incorporate that into the model, but I would say that windfall taxes are a bit beside the point.”
On November 29, Kaieteur News reported Vice President Jagdeo saying that windfall taxes will not be instituted at this time.
Jagdeo, in response to a question posed by Kaieteur News on why the government is not implementing windfall taxes since it does not breach the existing Production Sharing Agreement (PSA) with ExxonMobil and its partners, said, “I have dealt with windfall profits in the past, and why we believe that windfall taxation should not be pursued at this time. I dealt with it in the past, if you go back and read.”
Earlier this year, the Vice President had told the media that the windfall tax that some countries are exploring only came after intense pressure from their populations.
However, he explained why the institution of the tax could not be replicated in Guyana. “We are bound by a PSA (Production Sharing Agreement) with very specific terms on the taxation side.” To this end, he suggested, “if you change the taxation here, it’s considered a breach of the contract.”
(‘Implement windfall taxes, it is a common practice in oil sectors’ – Dr. Vincent Adams)
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