$781.9B budget – financed by oil, climate funds – presented
…no new taxes
By Jarryl Bryan
The People’s Progressive Party/Civic (PPP/C) Government on Monday presented its largest ever budget, a record $781.9 billion budget financed for the first time by a combination of both oil and climate funds and containing wide-ranging provisions.
Presenting the budget under the theme “Improving Lives Today, Building Prosperity for Tomorrow” was Senior Minister in the Office of the President with Responsibility for Finance, Dr Ashni Singh.
Among the measures in the budget is the increase of the “Because We Care” cash grants, from $25000 to $35,000 per child. This will place an additional amount of $2.1 billion in the homes of children attending both public and private school.
Old age pension was also increased to $33,000. According to the Finance Minister, this will place an additional $4.4 billion of disposable income in the hands of over 73,000 old-age pensioners. In 2021, all old-age pensioners were given $25,000 monthly and in 2022 that sum was increased to $28,000. Meanwhile, public assistance has been increased to $16,000.
The personal income tax threshold will also be increased from $75,000 to $85,000. This, according to the Finance Minister, will place an additional $303 billion into the hands of current taxpayers, both in the public and private sectors.
The Finance Minister announced a range of measures to not only incentivise the transition to lower emission vehicles in Guyana, but to also reduce the costs of gas-powered vehicles, new and old, entering the country.
One such measure was the removal of Value Added Tax (VAT) on new electric vehicles. Dr Singh explained that this measure applies to new (less than four years old) electric motor vehicles – not hybrid – of any power rating.
And to support the investment decision of businesses to switch to more environmentally friendly vehicles, the Finance Minister also announced an increase in the writing down allowance applicable to all electric motor vehicles to 50 per cent annually.
The Minister also announced additional measures to reduce the cost of motor vehicle ownership. These include the reduction of the duty on the importation of new (less than four years old) motor vehicles below 1500 cc from 45 per cent to now 35 per cent. This will reduce the cost of importing such a vehicle by approximately $200,000.
In addition, the current tax rate on used vehicles below 1500 cc (4 years and older) will now be replaced with a flat rate of taxes of $800,000. This will reduce the cost of importing such a vehicle by $300,000 on average.
According to the Finance Minister, the ownership of a motor vehicle is no longer considered a luxury. He pointed out that it improves the ease of access to and from home, places of work, and learning.
Cost of living support
According to Dr Singh, a total of $5 billion has been allocated to provide additional cost of living support. How these monies will be spent, according to the Finance Minister, depends on the outcomes of ongoing community engagements.
“Mr Speaker, recognising continued impacts of the cost of living challenges due to global developments as previously highlighted, Government continues to consult with stakeholders across the country on the development and implementation of interventions to alleviate the impact of increases in prices. In this regard, a total of $5 billion is allocated for additional cost of living measures to be determined from the ongoing community engagements,” he said.
The part-time job programme Government launched last year will also be expanded. Based on the programme, over 11,000 persons were employed through the programme in Regions Two, Three, Five, Six, Nine and 10. According to Singh, this injected $2.3 Billion into these households since the start of the programme.
“In 2023, this programme will continue and will be expanded, with $10 billion allocated. The beneficiaries of this programme are encouraged to upskill themselves so they can eventually take up full time employment as the labour market is confronted with a shortage of skills in certain areas,” Dr Singh said.
Targeted tax measures will also be employed, such as the removal of the 14 per cent VAT applied when residential properties are sold. This, according to the Minister, will further reduce the cost of home ownership and support the Government’s aggressive housing drive.
Recognising the importance of homeownership, Dr Singh also announced the increase in the low-income mortgage ceiling to $20 million – up from $15 million. This, he noted, will “…reduce the cost of borrowing within this range from the commercial banks, and further incentivising home ownership.”
Following up on last year when the Government slashed excise tax on fuel to zero in order to alleviate rising gas prices at the pump, Dr Singh announced that this measure will be maintained. Additionally, the reduction in freight charges which was first implemented in 2021 to reduce shipping costs, will be extended.
Among the allocations in the budget is the provision of $136.1 billion for work to enhance roads and bridge networks. A number of transformational projects are included under this heading, including the new Demerara River crossing.
A total of $54.5 billion has also been allocated by the Government for housing developments in new and existing areas. This includes money to construct roads, drains and bridges, and the installation of utilities.
The health sector will get some $84.9 billion, which will go towards financing the construction of various paediatric and maternal hospitals and six new regional hospitals. Additionally, money will also go towards rehabilitating and expanding existing hospitals, while over $500 million has been allocated to train healthcare professionals.
Speaking on the budget in a broadcast, President Dr Irfaan Ali described the budget as one that prioritises some of the most pressing needs of the people. He also encouraged persons to view the budget in the context of global constraints.
Prior to the date for the budget even being announced, it had been revealed earlier this month that a total of US$1 billion ($200 billion) would be made available from the Natural Resource Fund (NRF) for use in the budget.
Additionally, Vice President Bharrat Jagdeo had made known that with Guyana expected to receive two more payments of US$37.5 million this year from selling its carbon credits to Hess Corporation, US$150 million will be available for use in the 2023 budget.