Latest update December 19th, 2024 3:22 AM
GTUC calls for PAYE to be abolished
…says foreign companies enjoying tax-free ride at expense of citizens
Kaieteur News- The Guyana Trades Union Congress (GTUC) on Tuesday, called for the Pay-As-You-Earn (PAYE) tax system to be abolished and activate the Unemployment Regulation in the National Insurance Scheme Act.
General Secretary of the GTUC, Lincoln Lewis, told reporters during a press conference that, “The cost of living is too high. There is no way this should be acceptable given this new resource wealth, and the people are struggling and starving,” Lewis said.
General Secretary of the GTUC Lincoln Lewis.
Responding to a question posed by a reporter on whether he believes that abolishing the PAYE for the working class can lead to ‘Dutch Disease’ he said that that depends on how the economy is managed. “…This issue of a ‘Dutch Disease,’ it all depends upon how we will manage the economy. This (PAYE) is not one thing that directly affects the economy that may cause what is considered the ‘Dutch Disease,’” Lewis said.
Further, he reasoned that the money the government is foregoing when it gives away the large amounts of concessions to the foreign investors and companies amount to a lot more than the sum collected for PAYE from the ordinary citizens of the working class. He stressed that this PAYE is something they are burdened with while “the people who do the business, they get big tax concessions when they import equipment.”
This newspaper reported late September that for 2023, the Government of Guyana had to pay the combined sum of $306 billion in income taxes for ExxonMobil Guyana Limited and its Stabroek Block partners, Hess and CNOOC according to the companies’ audited financial statements, while for the same period Guyana earned $336 billion from its oil.
This arrangement, which saw the Government paying almost the same amount it earned from oil in taxes for the oil companies, last year, is as a result of the 2016 Production Sharing Agreement (PSA) the previous Coalition Government signed with the U.S. oil major. Exxon is the operator of the Stabroek Block, with 45% interest; Hess Guyana Exploration Limited holds 30% interest and China National Offshore Oil Corporation (CNOOC) Petroleum Guyana Limited holds 25% interest. Last year, the three companies earned $1.3 trillion in profits – entirely tax-free in Guyana. However, while Exxon, Hess, and CNOOC are not required to pay taxes, the 2016 oil contract provides for the taxes to be paid to the Guyana Revenue Authority (GRA) by the Government out of its share of profit oil.
According to the PSA, the Stabroek Block partners are allowed to recover 75% of the oil produced to recover their investment costs, the remaining 25% is considered profit, which is split between Guyana and the Stabroek Block consortium, giving each 12.5%. However, the consortium pays a 2% royalty from its share to Guyana. From its 14.5% Guyana then has to pay taxes for the oil companies. Notably, the provision of the Stabroek Block contract, which gives Exxon and its affiliates a tax-free ride in Guyana, has attracted criticisms locally and internationally. The contract states in Article 15.1 that the Contractor (ExxonMobil Guyana Limited) as well as its affiliates shall not be subjected to tax, value-added tax, excise tax, duty, fee, charge, or impost in respect of income derived from petroleum operations, property held or transactions except as specified under the agreement.
(GTUC calls for PAYE to be abolished)
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