Dear Editor,
Let’s examine the claim that Guyana was losing between – billion annually in procurement fraud and see whether the proposed State Assets Recovery Unit (SARU) legislation has any bearing on them whatsoever.
The claim is that Guyana was losing between -35 billion annually in procurement fraud. Without questioning the integrity of the estimate, this means that the APNU government, since acquiring Office in 2015, would have been able to increase savings or public expenditure by at least – billion by simply eradicating the corruption in procurement and without raising a single dollar in taxes and fees. Likewise, the APNU government, since acquiring Office in 2015, would have been able to add 0 billion to the economy by simply stopping illicit capital flight. In short, by simply eradicating procurement frauds and curbing illicit capital flight, the APNU government should have added between 0-0 billion of new money to the economy without raising a single dollar in taxes or fees. Where is the evidence of this?
In fact, what we have seen is the total opposite of this. We have seen an increase in taxes and fees to the tune of 10,000 per cent in some cases, and billions of dollars in public debt. Solving the procurement fraud issue requires the establishment of the procurement commission and updating the necessary laws and administrative rules, and curbing the illicit capital flight problem requires updating the relevant regulations and enforcement of compliance. None of these common-sense solutions has anything to do with SARU. If the Government is serious about these issues, it should be putting forward legislations that would solve these problems. To date, no such decision has been taken, which raises the question of whether these claims were based on facts in the first place.
The final claim is that Guyana was losing 8 billion through the underground economy. The definition of an ‘underground economy’ is economic transactions not measured by government statistics and ignoring government regulations and laws. The underground economy is also referred to as the ‘black market’, ‘shadow economy’ and ‘parallel economy’. Note that these are not illegal transactions, they are legal transactions. To bring the underground economy into the formal economy, therefore, requires broad-based reforms and improvement enforcement. For example, simplifying and streamlining business registrations, the acquisition of Tax Identification Numbers (TIN), making it simple and easy for small and bottom-house businesses to get registered and even establish support systems for such businesses to be encouraged to get on board with government’s rules and regulations, pay their fair share of taxes and contribute to shared prosperity of Guyanese.
And again, the Government’s actions are exactly the opposite of what is required to bring the underground economy into the formal economy. For example: the Government increased the cost of acquiring TIN; increased regulations that would make it harder for small businesses; increased the effective tax rates on households; and the list goes on. In short, the measures taken by the Government would feed the underground economy instead of curb it. Note that none of this has anything to do with SARU yet again. So, the entire justification of SARU is based on problems for which SARU’s existence would not resolve and its real purpose is to empower the Executive to take justice into the Government’s hand by circumventing the courts.
Let me end by saying that I do believe that anyone who stole from the public should be charged, placed before the court of law and for judgment, and penalties as permitted by our Constitution. The SARU Bill which would empower the Government to confiscate private property without due process is undemocratic and unconstitutional. Currently, the Government has the power to investigate and prosecute anyone who acquired public or private assets illegally, prosecute such individual and let the court decide their innocence or guilt, without SARU’s existence. Moreover, the entire justification for the SARU Bill is based on policy issues for which SARU’s existence would not solve. Instead, it would be added burden on taxpayers to fund SARU’s operation. Lawmakers should reject this Bill until its mandate can be made explicitly clear, sufficient evidence of the problems it seeks to resolve are available and its operation would not violate an individual right to private property and due process.
Sincerely,
Dhanraj Singh
Economist
