More taxes, less incentives fuelling economic woes – warns Edghill

– takes Gov’t to task for lack of economic plans for sectors, dismal mid-year report

The dismal production figures in some of Guyana’s most reliable sectors are continuing to cause worry. And ahead of a widely touted business summit, the political Opposition is taking the Government to task for not having a clear economic plan for the productive sectors.
Member of Parliament Juan Edghill is describing as mismanagement the absence of a plan, coupled with heavy taxes on citizens looking to earn an honest living. He observed that the Government’s policy of taxing before incentivising sectors with a record of top notch production is contributing to the overall economic woes.
“In the months that they have been in office, they have not produced a clear plan of how they intend to develop the economy of Guyana. As a matter of fact, the (sectors) that were doing well — like gold — they have taxed that sector so harshly that the gold miners have said they don’t know how they will survive. There is a situation where people are selling their excavators for next to nothing and coming out of the business,” Edghill detailed.
“For example,” he continued, “the two per cent final tax — the tributors tax — has been raised by a hundred per cent to 20 per cent. So it’s extremely difficult in a sector that was generating revenue. Where logging and forestry are concerned, a lot of those small loggers are now on the breadline. These were people who were doing well; they owned cars, bus, and they were able to expand their business.”
According to Edghill, the impression being given by the Government is one in which the other sectors are on the back burner ahead of the upcoming revenues from oil and gas. He used the Trinidad and Tobago economy as a reference.
“Look what is going on in Trinidad. The Trinidad budget was just read. That is a country that (reduced attention) on all its other sectors. (Now) the Trinidad Prime Minister has spoken out against hoarding. And this seems to be the route that Guyana wants to go.”

Jobs
Edghill stressed that while oil will bring in a lot of revenue, the money may not trickle down to the average citizen. And he noted that, compared to oil, productive sectors such as agriculture are much more likely to provide jobs on a large scale.
“There is no sector which brings employment more than the agriculture sector. Rice, sugar, other crops (and) expanding tourism (are) important, because tourism is service-oriented and job-creating. Oil, it’s just a few jobs. You’ll get money, but don’t have work. So we need oil, plus what we already have; not forsaking the sectors we already have. Incentivise and lend support to the other sectors,” Edghill expressed.
Groups such as the Georgetown Chamber of Commerce and Industry (GCCI) and the Guyana Manufacturing and Services Association (GMSA) have continually urged the Government to revise its economic policy.
At the GMSA’s recently held business luncheon, its president, Shyam Nokta, had noted that while oil is a lucrative natural resource, more attention and effective policies were needed in Guyana’s traditional sectors.
In his presentation, Nokta had also referred to the resource curse dubbed the “Dutch disease”, which can cause a reduction in the value of other exported commodities, and is often blamed on the sudden development of one sector at the expense of others.
“There is much talk about how the imminent oil and gas sector will change everything in our country. That is true, and that is precisely why we need to ensure we build all the institutional defences to defend against the well-known economic governance risk that oil and gas could bring,” he had said.
“But on the other hand, our economy could falter if we do not remain focused on the broader imperatives of supporting investments and job-creation across all our economic sectors. We need to prepare for oil and gas, but we also need to stay the course to ensure other sectors continue to grow,” Nokta had warned.
Nokta also listed some of the issues affecting manufacturers, including an unstable electricity supply; access to finance on reasonable terms; high freight costs, and market access. He called for specific interventions, including incentives and a review of taxes on industries such as forestry, for the 2018 budget.

Half-year report
The Ministry of Finance’s half-year report was released in July of this year. It had showed that certain sectors were reduced, when compared to the corresponding period in 2016. The declining sectors had included sugar, livestock, forestry, mining and quarrying, and even the bauxite industry.
It showed that sugar production was recorded at 49,606 tonnes at the half year, and when compared to 56,645 tonnes during the first half of 2016, represented a decline of 12.4 per cent. The livestock industry also contracted by 10.9 per cent in the first half of 2017, due to heavy rainfall severely affecting production, especially in the second quarter.
The forestry industry also showed an 18.2 per cent contraction in the first six months of 2017, compared to the same period in 2016. Declining production within the forestry industry was due to structural changes in the industry.
The mining and quarrying sector contracted by 4.0 per cent during the first half of 2017. Gold production fell by 1.7 per cent to 317,096 ounces in the first half of 2017, compared to the same period in 2016. Also, it showed the bauxite industry declined by 11.5 per cent as a result of reduced production of higher valued grades.