Dear Editor,
The 2017 Budget, which was recently laid before the National Assembly, is another example of great deception.
The budgets laid by this regime thus far have gotten progressively worse. They have reneged on almost every one of their promises. Where it appears that they have been honouring their pledges, it turns out to be a sleight-of-hand.
Take for instance, their promise to reduce the VAT to 10 per cent as soon as they took Office. In their first two budgets, no reduction was forthcoming. In this budget, they reduced it from 16 per cent to 14 per cent.
However, what they also did was to remove almost all the items which the PPP/C Administration had zero-rated and applied the tax on them. This is a big burden on the people.
In the 2016 Budget, they had removed machinery and equipment used by farmers and miners from the zero-rated list. So VAT has now been applied to essential food items, pharmaceuticals and alarmingly, on electricity and water. These measures will certainly reduce the standard of living for the vast majority of people in Guyana.
Real income of our people will fall; that is, their wages/salaries will buy less goods and services than two years ago.
Cost of living will rise due to the introduction of those measures. Pensioners who already had subsidies removed from electricity and water a year ago will now be taxed on these two essential services. Most pensioners will see a reduction in real terms.
Manufacturers will have to pay more (14 per cent) for electricity and water. This will subsequently increase production costs, and they will be forced to increase the prices for their goods and services.
This trend will make them uncompetitive with other competitors in the region and they may be forced to close their businesses.
It will also have a negative impact on tourism as hotel owners are bound to increase the prices for accommodation and other services. This will certainly reduce the flow of tourists to Guyana as they will choose more affordable destinations in the Caribbean and elsewhere. This is a great blow to this fledging industry.
Another major con that this PNC-led APNU/AFC regime is perpetuating on the people of this country is that this is a bigger budget for the people. In actual fact, they will be spending less on important social services to the people.
By introducing VAT charges on ministries, they are cutting the resources available to the people. As former Education Minister Priya Manickchand pointed out, at least $1 billion in taxes will have to be paid by the Education Ministry. Other ministries, too, will be soaked in the same fashion.
The net result – drastically reduced services to the people of Guyana. So we see that the size of the announced Budget is not real. It is much smaller than they said. This is a massive sleight-of-hand by the masters of deception.
It is also important to understand where the regime would spend all the money they are extracting from the people in taxes.
After all, no new major developmental project was announced. Most of the infrastructural works being done are projects started by the PPP/C. The funding for those was also acquired by the PPP/C through grants and soft loans.
The money is going to pay for the massive increase in the bureaucracy. Christopher Ram pointed out that the budgeted sum for contract workers has been increased by almost $2 billion. The 27 ministries and increased staff will also gobble up huge amounts of the financial resources.
Allowances and travel costs, both local and international, will balloon. Added to this, the regime is paying huge sums to PNC pensioners.
The recent Ministry of Health drug bond scandal, which will cost some $14 million per month, is one such deal. Another is the pet project at D’Urban Park in which more millions will be spent in one guise or another.
Clearly, we have a bureaucratic capitalist elite in power in our country that sees the State apparatus as a means of enriching themselves. Services to the people are secondary. This is a very aggressive class and clearly in a hurry to get rich as quickly.
In the process, deception becomes an important tool in their effort to hoodwink the people into believing that they are ruling in their interests.
Sincerely,
Donald Ramotar
Former President
