Jordan deceptively gives with one hand, takes more with the other – economist

The Guyana Government through Finance Minister Winston Jordan, continues to give with one hand and take more with the other – this time, through the reduction of Value Added Tax (VAT) by two per cent and reapplying it to a sleuth of goods and services, including utilities such as electricity and water.

This is the conclusion of former Alliance For Change (AFC) Executive Member and Economist, Sasenarine Singh. The former AFC top man was invited by Guyana Times to proffer an initial analysis of the 2017 $250 billion Budget that was presented by the Finance Minister on Monday last, and according to Singh, “after establishing in his first two budgets, a reputation for fragmented policy document without a comprehensive economic framework, Winston Jordan has not failed to surprise.”
According to the economist, the Minister continues “this deceptive strategy of giving with one hand and taking more with the next hand, and again it is the poor and the working class that will feel the most economic pain, thanks to Budget 2017.”
No choice Presented under the theme, “Building a Diversified Green Economy,” Singh told Guyana Times, “this document will clearly fail to take the average man any closer to the good life.” He noted that although there has been much talk of a four per cent growth rate, “reality finally dawned on the Minister as he had no choice but to reveal that the actual growth rate for 2016 will be 2.6 per cent which is a reflection of two previous budgets that were poorly constructed, implemented and monitored.”

He recalled too that the Minister himself admitted that the Public Sector Investment Programme performed poorly and this can be mirrored by the fact that the capital receipts that were budgeted at GY$31 billion actually came in GY$10 billion short because of the meagre draw-down on the international grants.
According to the economist, Minister Jordan ”wrong-footed the nation by implementing three budgets that are all designed to tax and spend, but the brunt of all new taxes are falling on the small man.”

VATABLE

Explaining his case, Singh used as example, the penalty for the small man for not painting his particulars on a horse cart in 2017 which has moved from $150 to $10,000. He also zeroed in on the 14 per cent Value Added Tax on electricity consumption of more than $10,000 per month.
According to Singh, “This is clear evidence of giving the workers with one hand with an increase in the tax threshold from $55,000 per month to $60,000, which should be able to put $1500 per month in new cash into the pocket of a worker that earns $60,000, but then if that worker has a light bill of $10,001 per month, they have to pay $1400 per month in VAT, leaving them with net increase in wealth of $100 per month… That cannot even buy a sweet drink in Guyana and certainly there will be no spare change for sweet for the children.”

The economist’s scathing remarks also extended to other tax measures announced by the Minister, one such being the announcement of the need for businesses to now be keeping dual accounts. According to the Singh, “the measure that the Minister claims are aimed at spurring growth is too convoluted and complex to reap the intended deliverables… Why can’t the Minister keep things simple?” Dual taxes He posited, “If you are giving the Private Sector a 27.5 per cent corporation tax rate, give it to them… There is no need to complicate the
matter and then claw back some of the benefits with a convoluted system called a
dual tax rate system for the companies.”

Singh has since adumbrated the position, “This measure clearly illustrates that the Minister does not clearly understand what drive value in the Guyanese economy and does not competently understand the critical challenges that are inhibiting Guyana’s growth…”
He told Guyana Times, “In the final analysis, this budget does have some major
economic risk that can undermine the 2017 growth rate from materialising… On the whole, the package of measures will stall, rather than accelerate, economic growth.”
Singh suggested that to grow the 2017 Guyanese economy, key growth centres
like agriculture, manufacturing and housing have to be better supported with complimentary economy activities being driven in a significant manner in renewable energy, ICT, and eco-tourism. The economist is adamant that “reducing VAT from 16 per cent to 14 per cent – while a campaign promise – is an ill-advised position… In the final analysis, this is a mixed budget that is unfair to the poor and the working class.”