Land, taxes and penalties

Feb 06, 2025 Features / Columnists, Peeping Tom

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Peeping Tom…

Kaieteur News-The American humorist Will Rogers once remarked that the best investment on earth is earth itself, because they’re not making any more of it. But in Guyana, where land is both a tool of economic leverage and a political bargaining chip, the question is not just who owns it but at what cost and under what conditions.

The government, in its fervent belief in private investment as the holy grail of economic salvation, has long engaged in the practice of selling state land at rates that range from absurdly generous to scandalously opaque. The rationale is that private investment creates jobs, generates wealth, and stimulates economic growth.

If one were to fully embrace this logic, then the question of land pricing would become moot. Indeed, why not take the argument to its logical extreme? If private investment is the golden goose, then the price of state land should not only be negligible but nonexistent. Land should be given away free, no strings attached—except one. After twenty years, it should revert to the state.

The investor receives the land as a means of capitalising their venture, sparing them the burden of upfront costs. They take the risk, they provide the jobs, they generate wealth, and they contribute to the national coffers through taxation. But after two decades, the land, having presumably increased in value, returns to public ownership, ready to be repurposed, reassigned, or resold under similar terms.

This, of course, is anathema to the entrenched land speculation class, whose primary business model revolves around acquiring state land at rock-bottom prices, waiting for a development boom, and flipping it for windfall profits. It is a model that produces neither investment nor employment, only an ever-inflating real estate bubble that locks ordinary citizens out of land ownership while enriching a select few. If the government’s claim—that land allocation is primarily about facilitating investment—is to be taken seriously, then it must abandon the outdated notion of land as a commodity to be sold and instead embrace the more pragmatic approach of land as an incentive for genuine economic activity.

Under this model, however, there must be a trade-off. The investor gets the land for free, but in exchange, they must forfeit the buffet of tax concessions that have become the standard offering for investors. No duty-free concessions, no corporate tax holidays, no sweetheart deals. Instead, the investor operates on a level playing field with the rest of the economy, contributing their fair share in taxes like any ordinary citizen. The government, in turn, collects its revenue through taxation, rather than the one-time sale of land.

Yet, government continues to subsidize private capital through generous land deals, endless tax write-offs, and controversial land allocation deals. It is a contradiction that demands resolution: if investment is indeed the key to prosperity, then why the need for perpetual state assistance?

Years ago, there was controversy over the fact that the sale, by the PPPC government, of prime lands on the East Coast to a businessman was done without a valuation. The businessman admitted that he paid around US$2M for the lands. But he pointed out that for this sum, Guyana was getting a US$40M investment and with that investment comes a range of benefits.

This brings us to another form of economic oppression masquerading as financial discipline—the issue of penalties on unpaid taxes, including municipal taxes (rates and taxes) income tax, VAT and corporation taxes. In any functioning tax system, penalties exist to ensure compliance. They serve as a deterrent against tax evasion and a safeguard against revenue shortfalls. But in Guyana, penalties are not just punitive; they are outright predatory.

A business, due to cash flow problems, may delay payment of its taxes. Almost immediately, penalties are applied—not just flat fees but compounded interest that grows exponentially over time. In many cases, the penalties and accumulated interest eclipse the original tax owed, turning a manageable debt into an insurmountable financial burden. The taxpayer, now unable to pay the full amount, is forced to seek a waiver, which creates its own problems. The issue, then, is not how many waivers are granted or the sums waived but why the penalties are so prohibitively high in the first place. In theory, tax penalties should encourage timely payment. In practice, they serve as a de facto death sentence for businesses already struggling to stay afloat. The government and local authorities have conveniently ignored the fact that the structure of penalties often pushes taxpayers further into delinquency rather than bringing them into compliance.

A rational system would calibrate penalties in a way that ensures deterrence without destruction. Late payments should incur reasonable fines, not compounding interest that rivals the worst excesses of loan sharking. Moreover, tax authorities should be in the business of collecting revenue, not bankrupting businesses.

The same logic applies to municipal rates and taxes, where the situation is equally dire. Across the country, municipalities lament their inability to collect outstanding taxes, but rather than reform the system to encourage payment, they double down on punitive measures that ensure non-payment remains the more rational choice. When a property owner is faced with the prospect of a tax bill that has ballooned due to interest and penalties, the incentive is not to pay but to avoid payment altogether.

If the goal is to create a system that encourages investment, tax compliance, and economic growth, then it must begin with an acknowledgment that punitive measures alone do not produce prosperity. The government cannot claim to be a champion of investment while simultaneously erecting barriers that make investment financially unviable. It cannot preach tax compliance while designing a system that ensures non-compliance becomes the only feasible option. Ultimately, these issues—land allocation, tax penalties, and investment incentives—are all part of the same broader question: is the government truly committed to economic progress, or is it merely engaged in a perpetual cycle of political patronage? If it is the former, then the solution is simple: free land for investors with a twenty-year reversion clause, an end to tax concessions, and a rationalization of penalties to ensure compliance without financial ruin. If it is the latter, then expect the status quo to persist—land sold at opaque prices to the well-connected, taxes designed to trap rather than encourage compliance, and economic policies that serve the interests of the few while impoverishing the many.

(Land, taxes and penalties)

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

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• golden goose, land pricing, Peeping Tom, scandalously opaque, Will Rogers

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