…as Govt blasted for tax measures
The Guyana Manufacturing and Services Association (GMSA) has blasted the Government’s tax measures and lack of an economic plan, saying its policies were harming rather than helping the manufacturing sector.
Newly elected President of the GMSA, Shyam Nokta, vehemently made this declaration as he addressed participants at the annual mid-year dinner hosted by the GMSA a few days ago. The tension was palpable as Nokta voiced the GMSA’s concerns and pointed out that “there is no lack of will among the manufacturing businesses”, but the GMSA is often constrained by challenges such as access to finance, cost of electricity, and market access.
And there could be no question that the Government got the message, as Finance Minister Winston Jordan was present as an invited guest and feature speaker at the event.
Nokta noted that while Government has made public commitments to create an enabling environment, its removal of items from Value Added Tax (VAT) exemption and implementation of other negative tax measures and policies belie these utterances.
“Such measures, coupled with increasing domestic demands and imported substitutes in the case of the wood processing sector in particular, have been unhelpful to value adding and encouraging the manufacturing sector,” the business executive said.
Encouraging the Government to provide assurances that it had remedies for the malaise affecting the economy, Nokta called on the Finance Minister to provide information on the Government’s policy position.
In addition, he called for the Government to make known its wider economic plan relating to other productive and export sectors.
In his rebuttal, however, Minister Jordan warned the GMSA against depending on Government to promote opportunities for them. According to Jordan, what Guyana needs is a new breed of investors.
Rebutting the contention that the coalition government has not done anything for the manufacturing and services sector, Jordan said: “In addition to the wide-ranging concessions granted by previous administrations, there have been several legislative and operational changes in support of the manufacturing industry in Guyana, (implemented) since May 2015.”
Jordan said exemptions on duty for raw materials and for imported machinery to be used in the manufacturing process have been maintained. He also related that the importation of raw materials has not been subject to excise tax since last year. Waivers on duty and taxes for items not listed on the approved list of raw materials were also cited by the Finance Minister.
But he noted the prerequisite that applications have to be made to the Council for Trade and Economic Development (COTED).
The minister pointed out that the VAT rate was reduced from 16 per cent to 14 per cent, and manufacturers with a revenue flow that is below $15 million are exempted from registering for VAT.
Jordan also proclaimed that the manufacturing sector benefitted from a reduction in the corporate tax rate — from 30 per cent to 27.5 per cent.
The sector’s meagre contribution to Guyana’s Gross Domestic Product (GDP) was recently highlighted by Georgetown Chamber of Commerce and Industry (GCCI) President Deodat Indar. According to Indar at a recent press conference, the sector is starved of incentives.
“There is little to nothing in terms of incentives (that) manufacturers get,” Indar said. “Look at the value of the GDP that manufacturers carry; it’s miniscule. We don’t even make a hammer in this country. So for us to really seriously think about manufacturing, we cannot have a seminar (for) a half-day (and expect we) would (be able to) look at all the top-of-the-line problems manufacturers have. We need to dig down in those issues,” Indar had said.