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The VP on taxes
Editorial…
Kaieteur News- It is rare for Guyana’s chief policymaker for the oil and gas sector, Bharrat Jagdeo, to differ from ExxonMobil Guyana’s President, Alistair Routledge. For his part, Routledge was so dismissive of the intelligence of Guyanese, that he held that royalties and profits are a better substitute for taxes.
For once, Jagdeo was having none of that, openly disagreeing with the ExxonMobil boss. It would say much more if Jagdeo goes beyond disagreeing with ExxonMobil, and moves into gear to do something about taxes not being paid by the company.
“On the waiving of taxes, profit sharing and royalty are a very important part of the PSA but we believe that there should be taxes too,” the former President said. We at this publication find favour with very element of that statement from Guyana’s chief oil and gas policymaker. We would agree some more, if there is more in royalties, more from profits, and a number higher than zero for corporate taxes paid by ExxonMobil. What is Guyana’s chief policymaker in the sector going to do on those three areas, and that’s only the start?
In the now familiar manner that Jagdeo has embraced, he went over his old story. “And that is why in the new PSA, we maintained the profit sharing, we increased the royalty from two to 10% and we have now put in a 10% corporate tax in the new PSA,” Jagdeo said.
There can be little objection to what Jagdeo said there because those are the facts of his new PSA (Production Sharing Agreement) of which he is proud. The objections begin with what he steered himself away from, and left out of his narrative about taxes, and the objections are huge. A 10% corporate tax sounds like a good start, but what the chief policymaker left out was his standing resistance to applying his new PSA to the rich Stabroek Block. It is where ExxonMobil is pumping like mad, and upping daily production levels before Guyanese can catch their breath. The percentages and other numbers are healthier when compared to the PSA signed in 2016 by the then APNU+AFC Coalition government. But they are just as hollow, altogether meaningless, because those percentages for royalties and taxes, and more, do not apply to the motherlode that is the Stabroek Block.
The Stabroek Block is where the real money is, money that would make a great difference in this country and its people’s lives. But Jagdeo shies away from going there, as though it is some fatal disease. It is part of the reason that Routledge can put up his misleading billboards that are an exercise in corporate trickery, with their claim of a total of 52% in revenues. In the topsy-turvy world that is Guyana since this massive oil wealth arrived, an oilman like Routledge talks like a local politician: all smoke and mischief. In a similar way, local politicians talk as though they are part of ExxonMobil as either its defenders, or its cheerleaders, or among its leading shareholders. Perhaps they are, with only Guyanese being left in the dark relative to their collusions with ExxonMobil.
ExxonMobil started with 3 billion barrels of oil when that 2016 PSA came into effect. Nine years later, Guyana’s proven oil reserves have almost quadrupled, yet ExxonMobil is stubbornly and brazenly holding on to that contract and its devastating provisions to Guyanese. ExxonMobil has gotten so tricky that it has probably stopped announcing new oil discoveries, while coming up with some cock-and-bull story about giving priority to “monetizing” existing assets. Jagdeo goes along with the tricks of the company, which makes it surprising that he took the stand he did in disagreeing with Routledge on taxes. The chief policymaker for the sector needs to go higher. He must not just disagree on taxes; he must go after getting a fair percentage for Guyana from ExxonMobil.
Vice President Jagdeo must remember all that he and his government committed to doing with the oil contract and deliver on what was promised. His slick oil leadership has run stale, with few Guyanese trusting him. He must make it his duty to do something about taxes and other hurtful contract provisions.
(The VP on taxes)
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