Local Guyanese exporters are next in line to be taxed by the current Government, as serious consideration is being given to have the zero rating of exports for Value Added Tax (VAT) purposes removed.
This was revealed by Opposition Leader and General Secretary of the Peoples Progressive Party (PPP), Bharrat Jagdeo, who said Thursday that this new development was brought to his attention recently.
Jagdeo said exporters were shocked to learn of the coalition Government’s plans to implement this new taxation initiative. He said it is a misguided approach to collect more taxes.
“Almost every country in the world where VAT is in place, they have a zero rating of the exports. So, it allows the producers to claim back their input VAT on their imports, so they can be internationally competitive. In our case, this will change,” Jagdeo told a media conference.
He said this decision could destroy the entire local export sector, where goods are going to become internationally uncompetitive, factories will have to close, and more people could lose their jobs.
The PPP General Secretary said this matter has been engaging the attention of the Guyana Manufacturing and Services Association (GMSA), where there are “serious worries in those quarters.”
Jagdeo said he hopes the organisation will take some urgent action to represent people in this regard, and to call on the minister to reverse this decision forthwith. He said, “It will harm our economy and damage all our exports the way it is now being treated.”
GMSA President Shyam Nokta previously blasted the Government’s tax measures and lack of an economic plan, saying Government’s policies were harming, rather than helping, the manufacturing sector.
Nokta had, during last year, raised concerns about issues affecting manufacturers, including an unstable electricity supply; access to finance on reasonable terms; high freight costs, and market access.
He said while Government has made commitment to create an enabling environment, its removal of items from VAT exemption and implementation of other negative tax measures and policies belie these utterances.
Shifting his attention to the meagre 2.1 percent economic growth recorded for 2017, the Opposition Leader described this figure as anaemic. According to him, it gives a clear picture of how incompetent the current Government is at managing the financial and economic affairs of the country.
Jagdeo said the economic growth figure is low by all standards, and is no way lending to the growth and development that is required in the country. He also reminded that the Government had to revise the growth projection three times, and it calls into question its presentations to Parliament regarding the economy.
“So now that it is low, all of the ratios they spoke to us about in the last budget in November would have to be recalibrated. And so the size of our fiscal deficit would climb, our balance of payment in relation to GDP will climb et cetera,” he explained.
Jagdeo, a trained economist, says it is not as simple as revising a number downwards, especially when that number is used as the denominator to calculate a range of macroeconomic issues and variables.
“Rather than the Minister of Finance (Winston Jordan) seriously addressing the issues to say what policy-wise can I do to stimulate the economy, he then makes excuses.”
There is no positive indication that Guyana has so far managed to manoeuvre its way out of the economic slow lane in which it has been stuck for the past three years due to the minimal GDP growth.
Finance Minister Winston Jordan made this admission during a press conference last week. Revealing that the 2017 end-of-year economic report has been completed, he linked the dismal figures to sectors, including sugar.
Initially, Government had projected that Guyana’s economy would have grown by a 3.8 per cent growth rate for 2017. This projection was reduced to 3.1 per cent, and then again to 2.9 per cent.