Private Sector praises Budget 2022 for pro-competitiveness measures
…as businesses urged to pass down benefits to consumers
Budget 2022 was described by President Dr Irfaan Ali as a budget that would, among other things, serve as the platform for Guyana to further develop its manufacturing and agro-processing capacity. And indeed, the budget is receiving praise from the Private Sector Commission (PSC) and the Guyana Manufacturing and Services Association (GMSA).
In a statement on Saturday, the PSC commended Senior Minister with responsibility for Finance, Dr Ashni Singh for presenting a balanced budget with no new taxes. According to the PSC, this budget will lay the foundation for massive economic growth, expansion of the Private Sector and the creation of jobs for all Guyanese.
“The PSC notes that in addition to the wide range of public investment projects and initiatives to stimulate economic activity and generate incomes, Budget 2022 proposes measures aimed at improving business competitiveness, promoting local content and ensuring tax parity,” PSC said.
“The Commission is pleased to see that some of the measures proposed during consultations with the Private Sector Commission on the national budget were considered and reflected in the budget for 2022.”
The PSC zeroed in on specific noteworthy measures, including the elimination of the 2 per cent withholding tax on resident contractors, the removal of the 10 per cent excise tax and 14 per cent Value Added Taxes (VAT) on commercial trucks, haulers, cranes, safety equipment, and oil spill response equipment.
The removal of excise tax on the importation of new double and single cab pick-ups was also praised, as well as the lowering of the excise tax on gasoline and diesel to 10 per cent and the extension of freight costs to pre-pandemic levels. The allocation of $420.5 million to train unskilled Guyanese for jobs in the oil and gas sector was also praised.
“The Commission is aware of the fact that the budget must be shaped in the context of the global and domestic environment, given the problem of the supply chain and the challenge of pandemic. The PSC believes that this budget is well on its way to bringing about major transformation in the economy,” PSC said.
In its statement, the GMSA commended the Government for what it called a “historic and transformational budget”. Among the aspects of the $552.9 billion budget that was praised was the fact that no new taxes were proposed in the budget.
“As is customary, the GMSA made an extensive submission for Budget 2022 to alleviate many of the challenges its membership faces within each of the major sectors. A significant number of tax measures and budget allocations will help the manufacturing sector advance competitiveness and capacity building.”
“While the GMSA was hopeful for more reduction of the VAT rate and adding more goods and services to the zero rated and exempt supplies, the association recognises that this was a very strategic budget which strikes a balance for both businesses and individuals,” the Association said.
According to GMSA, more jobs will be created with the Government’s budgetary allocations towards infrastructure. GMSA also noted that there is likely to see a sudden demand for more skilled and unskilled workers, which would in turn create a spike in employment cost.
The Association also noted that a pressing concern among its membership, largely made up of small business owners in the agro-processing, forestry and services sector, is access to finance which has hindered growth. This, GMSA said, was addressed by the budget.
“The GMSA anticipates the benefit of affordable financing and revolving fund stemming from proceeds of Guyana’s new and emerging oil sector. Hence, it is our hope that the recently passed Natural Resource Fund Bill will aid to the facilitation of affordable capital,” the Association said.
“GMSA complements the Government’s initiative in 2021 to facilitate grants valued at $329 million to Small Business Bureau (SBB) which benefited many small businesses. The GMSA would like to ask for an expansion of the grant component to further improve small business capabilities and readiness for local content opportunities.”
The GMSA meanwhile recommended that robust funding go towards regulatory agencies such as the Government Analyst-Food and Drug Department (GA-FDD), Guyana National Bureau of Standards (GNBS), Guyana Revenue Authority (GRA), and Environmental Protection Agency (EPA). These agencies, according to GMSA, play a vital role for the development of industries that adhere to international standards.
“It is noteworthy to mention that the weakening of competitiveness in recent years has put our country at a major disadvantage in the traditional sectors. The GMSA would like to see resuscitation of the National Competitiveness Council and an update to the National Competitiveness Strategy.”
“The GMSA is extremely pleased about the budgeted amount of $245 million for the establishment of new industrial estates in Regions Two and 10. Industrial estates with closer proximity to raw material sources will certainly help with competitiveness as more manufacturing facilities are established,” GMSA said.
The GMSA also referred to the Government’s planned investments in alternative energy and hinterland roads, which it noted would strengthen Guyana’s competitiveness.
Meanwhile, the Federation of Independent Trade Unions of Guyana (FITUG) also spoke highly of the 2022 budget. The Union was of the view that the Government of Guyana had listened to the concerns of the people, with the budget the result.
“In this vein, we recognise the improvement in the income tax threshold that will improve workers’ disposable income. We note too, the expansion of tax-free allowances to include life and medical insurance premiums. Apart from putting more monies in the hands of workers, the policy ensures that our workers and their families have better protection in difficult times.”
“Additionally, we considered the decision to exempt withholding taxes on certain level of interest payments. Clearly, this is a pro-poor initiative that ensures that our ordinary people can save and gain more,” FITUG said.
FITUG said that in addition to the tax measures, the budget contains several pro-people initiatives which the Federation welcomes. One such pro-people measure is the significant boost given to school children who will now receive $30,000 aggregately.
“Additionally, thousands of our children will benefit from the provision of tablets and flash drives undoubtedly to close the chasm between the rich and the poor. An outstanding initiative of Budget 2022 is the provision of support to dialysis patients. The FITUG is aware that this life-saving treatment cannot be afforded by everyone, and the State’s support will undoubtedly make a meaningful difference.”
“We recognised from Budget 2022 the deliberate efforts to mitigate against international developments which have redounded to higher cost-of-living. We laud the extension of the freight cost adjustment that seeks to levy taxes at pre-pandemic levels,” FITUG also said.
Another measure praised by FITUG was the reduction of excise tax on fuel from 20 per cent to 10 per cent, which the Union said was particularly impactful. The Union warned that businesses should pass down the savings from this measure. The announced investments in the housing sector and the money being invested in the social sectors were also welcomed by the Union.
“We, at this time, urge businesses to pass down the savings accruing to customers to ensure that the Government’s policies are truly impactful. The Federation also commends the decision to establish farmer markets. We believe the initiative will be a boon to both consumers and farmers and cushion the prices in the cost of food,” the Union said.
“FITUG recognises that Budget 2022 is heavy on plans for tomorrow as well. It places special emphasis on infrastructure to ensure that our country can respond to the growing demands of the future,” FITUG added.