PSC calls on Govt to increase income tax threshold to $100,000

The Private Sector Commission (PSC) has presented Government with a range of proposals which it says, if implemented, could boost the ailing economy.

Among the proposals is an increase in the income tax threshold to $100,000 per month.

The Commission floated its recommendations by way of a public statement on Thursday, saying there were several measures which could stimulate the economy and lead to balanced growth, as well as have a positive impact on Government revenue in the medium and long term.

The PSC observed that it was generally accepted that Guyana’s economy was not performing at its optimum level and that the slowdown began some two years ago.

According to the PSC, while the nation’s Gross Domestic Product (GDP) growth is expected to reach four per cent in 2016, this is attributed primarily to the increased production of gold, especially by two large-scale gold mining operations.

This, the Commission said, has masked the decline in performance of other economic sectors, but “this decline is having far-reaching implications for the business sector”.

“One manifestation of this is the significant growth of non-performing loans in the commercial banking sector…The International Monetary Fund has reported that non-performing loans increased to 11.5 per cent at the end of December 2015 as compared to six per cent at the end of 2013. The challenge for Government, with the collaboration of the Private Sector, is to stimulate economic activity across all sectors,” the PSC said in its release.

Among the recommendations proffered were: a permanent reduction of the corporate income tax rate, over 10 years to 20 per cent; reduction of the personal income tax rate, over 10 years, to 20 per cent; concessions on income taxation for the creation of new employment in all value-added sectors; tax breaks for new tourism assets; tax breaks for companies which set up operations in depressed communities; concessions on export tax for businesses which export, and relief on outstanding loans for the rice industry, among other things

It has also suggested a compulsory VAT registration and enforcement of VAT collection on all businesses which currently do not collect this tax; implementation of all PS- supported infrastructure projects; urgent approval of a harbour finance model; speedy implementation of all Government projects to release Government spending; the commencement of the design and building of Lethem Road for completion over a five-year period, with the raising of capital on international markets with tolls being used over 25 years to repay loan; implementation of plans for an alternative East Bank road, the dredging of Demerara Harbour, the building of an alternative Demerara Harbour Bridge and the facilitation of the process of ensuring reliable energy is provided at US 12 cents per KWH.

The PSC is also calling for the appointment of an Economic Council for Guyana in addition to legislation to cater for a separate non-political council and internal audit departments in all government agencies.

The Private Sector umbrella body is also looking to have Government enact mergers and acquisitions legislation and to introduce bankruptcy protection legislation in addition to the finalising and tabling of the E-Transactions Bill.

With regard to future economic performance, the PSC wants Government to set a GDP growth rate of eight per cent while keeping the inflation rate at about two per cent.

The PSC is also looking to have Government retain a system of zero-rating for selected goods for relief of lower income persons.

The Private Sector body said too it wanted Government to devise and implement a plan for the industrialisation of Guyana moving away from the traditional extractive and agricultural pillars of the economy.

The PSC also wants Government to reduce the purchase of Treasury Bills by 20 per cent from the prior year, in order to increase liquidity and reduce commercial banks’ interest rates.

It has also proposed the utilisation of the Guyana Geology and Mines Commission (GGMC) to commence the establishment of the Government’s proposed Sovereign Wealth Fund.