No new taxes; Govt reduces water rate, removes VAT from basic food items, data
…as sweeping relief measures announced in Budget 2021
Finance Minister, Dr Ashni Singh on Friday announced a series of measures to bring relief to Guyanese including the reduction of water rates and the removal of Value-Added Tax (VAT) on residential and individual data use.
During his presentation of the 2021 budget to the National Assembly, Minister Singh underscored that water is essential to daily activities, both at the residential and the commercial level. To this end, he revealed a five per cent reduction in water tariffs across the board, targeting all levels of consumers.
According to the Finance Minister, Guyanese were burdened with the VAT that was imposed on water consumption while the water subsidy for pensioners had been stripped – all at the hands of the APNU/AFC coalition.
Nevertheless, he noted that within two months after taking office in August 2020, the PPP/C Government undertook steps to reverse these harsh measures including restoring the water subsidy to senior citizens from which some 28,270 have benefitted thus far.
In addition, Dr Singh posited that the Guyana Water Incorporated (GWI) has prepared a new 5-year strategic plan for the period 2021-2025 which is aligned with national priorities and advances the Government’s mission to provide clean, reliable and affordable water with emphasis on increasing access to treated water coverage to 90 per cent, reduction of non-revenue water (NRW), the modernisation of the sanitisation infrastructure network, integrated water resource management and wastewater treatment.
At the end of 2020, some $2.7 billion was expanded on several projects under the water sector and this year, another $4 billion has been allocated to procure equipment and improve and expand the water supply network systems across the country. The Finance Minister added that provision was made for the drilling of new wells along with the upgrading of photovoltaic systems, storage facilities, distribution networks and service connections across Regions One, Three, Seven, Eight and Nine. Further, the upgrading of distribution networks across Regions Eight and Nine will be undertaken.
Another $275 million has been budgeted in 2021 to address the issue of non-revenue water with the procurement and installation of 20,000 water meters for Residential and Business Areas across the country. Additionally, $200 million has been allocated to expand the Sophia, Eccles, Covent Garden, Grove, Friendship and Vergenoegen water treatment plants to benefit over 50,000 residents. Further, Government will upgrade the transmission mains between Church to Cummings Streets and Cemetery Road to Mandela Avenue benefiting over 35,000 residents, and has allocated $100 million to procure electromechanical equipment for the rehabilitation of water production facilities.
No new taxes
The PPP/C Government presented the $383.1 billion 2021 budget, themed “A Path to Recovery, Economic Dynamism and Resilience”, without the introduction of any new taxes.
On the contrary, the sweeping relief measures announced by the Finance Minister on Friday saw the removal of VAT from a slew of food items and household necessities to alleviate the burden on taxpayers.
According to Dr Singh, Government will restore to the zero-rated status all of the food items and other basic household necessities that were previously zero-rated in 2015 before the last PPP/C regime demitted office. These items include basic wheaten flour, basic breads, oats, unflavoured cracker biscuits, cooking oil, locally produced bed sheets and pillowcases, toothbrushes, etc. This, he noted, is in fulfilment of another one of the PPP/C’s manifesto promises.
Removal of VAT and duties
Meanwhile, Government has been proactive in working with stakeholders in the diffusion of ICT across all sectors and regions of Guyana as a means of economic and social empowerment for Guyanese.
Against this backdrop, the Minister announced the removal of VAT on data for residential and individual use.
Dr Singh further reminded of his Administration’s swift liberalisation of the telecommunications sector and the ensuing benefits that competition has brought through lower prices and a push to improve services have delivered on the initial step of the PPP/C’s promise and vision for enhanced ICT services.
“Our Government will move swiftly to ensure that the benefits of the liberalisation reach all sectors in the form of faster and cheaper internet service, which will serve as a catalyst for ICT-related business development and will make business more efficient and resilient and drive job creation,” he noted.
Already, the Finance Minister noted that over 450 jobs will be created in the area of business process outsourcing (BPO) with the operationalisation of call centres at Tuschen, Enmore, and Linden, partly facilitated by decreased cost of internet service. Government, he added, will also be engaging with the BPO sector with a view to facilitating scaled-up presence in Guyana. As such, $67 million was allocated to rehabilitate the facility in Linden which is expected to host the call centre there.
In addition, Budget 2021 also caters for the removal of duties on ATVs (All-Terrain Vehicles) for use in the hinterland. Dr Singh posited that this will reduce the cost of transportation to hinterland communities for operators.
Moreover, other sweeping relief measures introduced in the 2021 budget includes a cash grant of $15,000 per child to be given to the parents of children in the nursery, primary, and secondary schools in the public school system.
Government will also be raising Old Age Pensions from $20,500 to $25,000 with effect from January 1, 2021 – a measure that will benefit over 60,000 persons and put an additional $4 billion of disposable income in their hands.
Another measure is the increase of Public Assistance payment from $9000 to $12,000 monthly, benefiting over 13,000 persons and providing an additional $500 million in disposable income to these individuals.
According to Minister Singh, the measures introduced in the 2021 budget will add a further $10 billion to last year’s $40 billion annualised cost. (G8)