The Private Sector Commission (PSC) views the move by the APNU+AFC government to implement a ban on importation of vehicles that are eight (8) years and older as a decision which is ‘unnecessary’ at this time and will have a negative connotation on many.
As such, the PSC is urging the administration to “seriously” review and reconsider taking such a route since it will most likely place undue pressure on low and middle income earners.
In a statement to the media released this morning, the Private Sector body also highlighted the planned early implementation of the requirement to provide compliance certificates in order to obtain licences as “a major concern”.
“…there needs to be some clarification of the impact of this. We feel that this measure, while being a good way to ensure compliance, should have been implemented at least a year after the date of its announcement to give persons time to get their taxes in order. The capacity of the Guyana Revenue Authority is paramount to the smooth implementation of this measure and we do not believe that the agency is currently capable of handling the expected thousands of persons who will be seeking in a short time to regularise their status as taxpayers,” the PSC stated.
Additionally, the PSC has aired its disappointment that its recommendation to the government of having a comprehensive reform of corporate taxes and Pay As You Earn (PAYE) was not taken into consideration at this point in time.
However, the Commission acknowledged that it does understand that such reform may have to await the findings of the Tax Reform Committee.
Meanwhile, the PSC pointed out that the tax threshold increase as announced by the administration during the presentation of Budget 2016 last week is a welcomed move though it opines that it should have been a higher increase so as to provide relief to low income earners.
“The Commission is also pleased that there was no reduction in the rate of the Value Added Tax (VAT). We are also happy that packaging materials have been made exempt from VAT and that tax refunds can now be applied across the board. The increases in gun licence fees are also fair and will boost government revenue but we are concerned about the impact on indigenous people who rely on shotguns for their livelihood,” the media statement further said.
According to the PSC, the significant sums allocated for the education, health, public security and agriculture sectors reveal that the focus of the government is on what is needed by the country and for the good of the people.
The PSC said, too, that it is pleased “the Amaila Falls Hydroelectricity project is being studied again and would urge the government to see this project through since it would have untold benefits to business and to all consumers of energy.”
The Private Sector Commissionsaid it is also pleased about the plans for a new Demerara Harbour Bridge and the East Bank to East Coast bypass road. The Commission is hopeful that public servants will soon receive their salary increases and that these will be substantial since, not only is this needed by the persons themselves, but the resultant spending will help the economy to recover,” the release stated.
The PSC also said that while it is ‘generally satisfied with Budget 2016’ it is urging the government to ensure that all the provisions of this year’s budget are implemented and the allocated sums are spent since approximately 60 per cent of the economy relies on ‘government spending.’
“Also crucial to a vibrant economy is investor confidence. Too many investors have been adopting a ‘wait and see’ attitude and we feel that this budget will restore that confidence and stimulate investment.”
Also, it is of the opinion that the budget will provide a significant stimulus to the economy as it recovers from a “sluggish 2015.”
“The PSC believes that Budget 2016 will generate growth and is happy about the planned expenditure on infrastructure, in particular the $2 billion that will be spent on hinterland airstrips. This will improve connectivity with the hinterland and allow for access to markets in the city and beyond by our producers in those regions,” the media statement added.
Meanwhile, some of the concerns raised by the PSC in its statement this morning, with regards to Budget 2016, were raised yesterday by Opposition Leader Dr Bharrat Jagdeo at a news conference he hosted.
Dr Jagdeo is strongly of the view that Budget 2016 and the measures detailed by Finance Minister Winston Jordan, underscored the “need for a more sensible approach” to be taken towards policy-making, particularly since many of these measures do not see greater benefits being directed to the Guyanese people.
“When you do these things, they have to make sense. And in that regard, I am calling on President David Granger and his Finance Minister to make changes to several of the measures announced by Minister Jordan,” Dr Jagdeo told reporters.
The Opposition Leader called on the Government to change the restriction of the importation of used and/or re-conditioned vehicles to under twelve (12) years old – instead of eight (8) years – from the date of manufacture to the date of importation. This will ensure that persons from the lower middle class and the poor, many of whom purchase vehicles on terms, as well as auto dealers, do not suffer the gravity that the announced move will have on their lives and livelihoods.
For example, in speaking to an auto dealer, it was explained that a Toyota Premio costs $2.5M on the local market, and if the new model is to be imported it will cost buyers $3.6M, which is over $1M more than the cost currently.
Dr Jagdeo also called on the coalition Government to “remove totally or change the restriction” of the importation of used and/or re-conditioned heavy duty motorized vehicles, including trucks, canters, etc., to between fifteen (15) and twenty (20) years old – instead of eight (8) years – from the date of manufacture to the date of importation. Many in the construction, mining, rice, forestry and transportation sectors will benefit from such a change, he argued.
Currently, a single axel truck costs between $5M and $6M and the new policy will see that cost increased to as much as $18M. The same applies to double axel vehicles with the cost moving from between $9M and $10M to $27M.
Dr Jagdeo also called on the David Granger-led Government to withdraw the ban on the importation of used tyres.
Instead, Dr Jagdeo suggested expanding the staff and strengthen the regulatory capacity of the Guyana National Bureau of Standards (GNBS) to ensure the quality of the used tyres. According to him, justifying the move as an effort to boost road safety is not completely factual, since most of the accidents on our roadways are caused by drunk driving and speeding.
“I spoke to one owner of a canter and the cost for a tyre is $16,000. The proposed ban will now see him paying $70,000. Imagine the prices for bigger tyres. The prices will be astronomical. A new tyre will now cost about 50 per cent of the minimum wage, which is $50,000,” Dr Jagdeo told reporters.
He said farmers and Amerindians should be exempted from the proposed increase in gun licenses fees, since their livelihoods depend on their possession of firearms.
Dr Jagdeo also called on Government to reduce the announced increases in a raft of licenses by 50 per cent, pointing out that most of the proposed increases see a jump from between 50 and 700 per cent.
The fees to be increased relate to drivers’ licenses, fitness, motorcycles, motor vehicles other than a motorcycle, hire cars, motor busses, good vehicles, articulated vehicles and other vehicles, including motor tractors and trailers and motor hearses. Also included are application fees, licence fees and renewal fees for hotels, off licence areas, liquor restaurants, spirit shops, members clubs, malt and wine and wine bars. There are several others, which will be increased once the laws are changed – over 130, according to Dr Jagdeo.
He also said that the proposed amendment to the Tax Act to ensure that prior to the issuance of all licenses for public use, the applicant must be compliant with obligations to file annual returns and paid, or has made arrangements to pay all taxes due and payable, should be reconsidered.
“Instead, Government should move in a phased manner by first going after areas where the potential of revenues being recovered are greater. In the meantime, the capacity of the Guyana Revenue Authority should be increased to allow it to be able to respond to the changes being proposed,” the Opposition Leader suggested.
“With government’s proposal, we are looking at an estimate of as much as 70,000 additional persons who will have to access GRA’s service to get certificates of tax compliance. The law currently states that GRA has the jurisdiction over the last seven years. If only 50,000 have never submitted tax returns in the past, they will have to submit now, for the last seven years. That is 350,000 additional tax return documents to be processed. Does GRA have the capacity to handle 70,000 new persons approaching them? Any right thinking person knows that GRA does not have the capacity to do this. It will create bottlenecks for business, greater corruption and I doubt it will significantly impact on increased revenue collection,” Dr Jagdeo stated.
The former President also called on Government to withdraw the announced move to introduce a broad-based environmental tax, which will place greater burdens on a great number of Guyanese.
“Government has justified to some of these draconian measures as a move to ‘green’ the local economy, in addition to raising additional taxes. We in the PPP/C have always sought to balance the green economy and the Low Carbon Development Strategy (LCDS), with the need to improve people’s lives and not bringing additional burdens on them,” Dr Jagdeo noted.
Alluding to the fact that Government is about creating the environment for citizens to do well, the Opposition Leader said the philosophy of the APNU+AFC Government seems different; “rather than focus on the productive sectors – we saw no help for rice, sugar, mining, bauxite, fishing and forestry – given that these are the sectors that create wealth, we saw a focus on filling the coffers on Government, on the backs of ordinary Guyanese”.
Jagdeo pointed out that the announced measures, related to vehicles, will be a strain on the pockets of ordinary Guyanese in many ways. For example, these moves are expected to see an increase in the cost of public transportation, among several other negatives of such an undertaking, he said.
“Guyanese will be undeniably hard hit by these measures. What Government is doing is essentially taking wealth from people and putting it into the treasury for Government spending,” the former two-term President and Moscow-trained Economist contended.
“If you follow the trail of the measures announced you will find who they favour. The measures are favourable to a few special interests. The trail leads to both individuals and companies, some with real connections to the APNU+AFC government. In this manner, the Guyanese people are not the ones who are being helped. The Government is definitely not helping the poor. This is not how you expand wealth. It is not how you make a country better,” Dr Jagdeo declared.
The former President also called on the Government to reduce the fuel and electricity prices to reflect the true tumble in oil prices on the global world market.
According to him, “a five per cent rebate in electricity charges is a joke, and why should it be effective until April 1, 2016? Why wait two months?”
Jagdeo said the announcement by itself has absolutely nothing to do with budget. “Will we wait until 2017 if the prices go back up? What we are doing is taking money from ordinary Guyanese people and putting it into the coffers of Government,” he posited.
Other issues of concern that the former President spoke on at his press conference, include the APNU/AFC Government’s negotiation of a Wind Power project with an individual who was publicly endorsed as the “personal friend” of a sitting Government Minister; the lack of transparency and procurement reform that makes Government’s actions less transparent, such as increasing limits for awards of public monies that can be made by Ministers, and an increase of spending limits that required a three-quotation compliance, to ensure the lowest price is paid.
Dr Jagdeo also noted that the “slowdown in investments deal secured by GoInvest” was also noted, a reduction from $89B in 2015 to $11B in 2016. This, he said, shows there is no private sector confidence.
The Opposition Leader promised that all of these issues and more will be expounded on during the debates on Budget 2016, which begin next Monday.