…forestry sector reports increase in cheaper substitute – FPA
The Forest Products Association of Guyana (FPA) is again raising concerns about the imposition of Value Added Tax (VAT) on local lumber at all stages in the production chain.
FPA President Ricky Ramsaroop on Tuesday said consumers were now going after plastic wood substitutes and concrete, and in some cases importing alternative construction products instead of lumber.
The main reason for this, according to Ramsaroop, is the VAT that was imposed on the sector this year. He said this was now taking a toll on the local industry and persons were now feeling the squeeze.
“So, people prefer to go for concrete products and all of that is putting pressure on the wood sector. This is where we expect the Government will intervene,” the FPA head asserted.
Ramsaroop, who also serves as a director at the Guyana Forestry Commission (GFC), told Guyana Times that this issue was brought up for discussion at a Commission meeting.
He said now that it has the attention of the GFC, it is hoped that the matter would be raised again with the Government, to look at ways of possibly reversing or reducing the VAT rate.
The FPA head claimed this could cause a virtual shutdown of the sector, create mass unemployment in specific Amerindian communities and for other persons living in the interior.
Illegal logging
Ramsaroop said it also had the potential to increase illegal logging and deforestation and forest degradation, thus endangering the Green Development Plan and access to future carbon funds. Meanwhile, the VAT to some extent is already causing a reduction in forestry activities, and hinterland roads and other infrastructure maintained by forest operators could be threatened also.
Opposition Leader Bharrat Jagdeo has said that the imposition of VAT on the sector was in direct conflict with the Government’s stated objective of promoting value-added production.
Locally-produced lumber-based items, including plywood, are also subject to VAT. Previously, there was no VAT on the final sale of lumber and plywood. And Jagdeo said this would only deter individuals from buying the commodity.
The former President said the coalition Government had been critical of loggers and logging companies summarily cutting down trees and exporting them, but its position had now changed.
According to him, while Government claims it wants to support more value-added activities in the forestry sector, it has simultaneously placed 14 per cent VAT on processed lumber.
Last year, the forestry sector contracted more than 30 per cent, principally as a result of Barama halting the production of logs and the United Kingdom’s restriction on greenheart logs originating from Guyana.
In its March 2017 monthly bulletin, the Finance Ministry said that forestry production for February 2017 amounted to 21,300 cubic metres compared with 25,319 cubic metres in February 2016. According to the report, this has resulted in production reaching 37,074 cubic metres, year-to-date, compared to 51,052 cubic metres in 2016.
