Ramkarran chides Govt for abandoning efforts to grow economy
Former People’s Progressive Party (PPP) stalwart Ralph Ramkarran has stated that in light of the 2017 “taxation” Budget, Government seems to be giving the impression that it has neglected efforts to grow the economy and has become satisfied with marking time until oil arrives.
He stated in his weekly column, “The Conversation Tree”, that with Guyana’s economy declining, the income of the Government has also declined significantly, along with its ability to spend. Therefore, he posited that in making its decision on the Budget, the Government found itself between a rock and a hard place –it had to settle on whether to reduce spending in proportion to its reduced income or sustain the same or a similar level of previous public spending, by raising funds by way of taxation and borrowing.
“It chose the latter course by imposing or increasing taxes on individuals and businesses. It has also increased the amount that it will borrow next year, eliminating any prospect of a decline in interest rates,” he said, adding that the taxation measures will only reduce burden on the “well-off and on companies”, while the burden on low- and medium-income earners will be increased.
“The promise of an expanding economy to meet the growing needs of the Guyanese people will not be achieved by this budget. Large-scale projects and big-ticket items have been shelved or are on the back burner. Barama has packed up its forestry operations, because no one is capable of making a decision on its application for a renewal of its lease. Investors complain that decisions on proposals are not being given serious or any consideration. Decision-making, they claim, appears to be at a standstill and no one seems willing or capable of pushing projects that will benefit the nation,” he said.
Ramkarran highlighted that the “exciting promise of change in 2015 has not materialised”, and without an overarching strategy for the growth of mining, forestry, rice, agriculture, hydro-power, technology, construction and other sectors, and constant and relentless efforts to remove roadblocks and encourage business, the Government gives the impression, which may or may not be true that it has abandoned serious efforts to grow the economy.
Moreover, Ramkarran added that if it was the Government’s plan to wait until oil has arrived, that was not a plan at all. He went on to state that for both the population and businesses, the elimination of the zero-rated status and imposition of exempt status on a range of goods and services will result in higher prices to consumers, as the cost of VAT on inputs for those goods and services will make them more expensive to produce.
“The burden will have to be borne by consumers, as some businesses have already indicated,” he said, adding that it was also untrue that the imposition of VAT on water and electricity would not affect low-income consumers. Instead, he indicated that the cost of production of all goods and services that utilise water and/or electricity would go up and would inevitably be passed on to the consumer.
“The consumer, therefore, gets a double whammy. First, he/she has to face the increased cost of goods and services that lose zero-rated status as regards VAT. Second, he/she has to face the increased cost of goods and services that use water and/or electricity in their production. Any relief by way of reduced income tax or VAT for low-income earners will be far outweighed by the increase in the cost of living due to zero-rating and VAT on water and electricity,” he explained.
Furthermore, Ramkarran noted that the proposed power to be given to the Commissioner General of the Guyana Revenue Authority (GRA) to raid the bank accounts of defaulting taxpayers and/or to prevent them from leaving Guyana has caused fear. He underscored that the Commissioner General already has the power “under Section 102 of the Income Tax Act of garnishment”, that is, requiring entities, which would include a bank, which owe a taxpayer who “is liable to make a payment of tax”, to pay the sum to the Commissioner General. Therefore, he stated that the Government needed nothing more.