The Government is perhaps in the final stages of preparation of Budget 2018, and as expected, citizens and businesses are eager to find out “what’s in it” for them. For example, would it contribute in any way to them having more disposable income to cushion the effects of rising prices? Would it put an ease on the heavy tax burden which currently obtains? Or, in a general sense, would it serve to contribute to the so-called better life, which the APNU/AFC had promised during the 2015 Elections campaign?
If one were to go by the last two budgets, there would not be much optimism, as it could be recalled that there were many more negatives than positives for the populace, with both citizens and businesses still finding it very difficult to cope. In fact, there were many proposals in the last budget which militate against society. For example, putting VAT on electricity and water supplies placed additional hardships on poor families. While it may indeed not affect very small families directly, it certainly affects them indirectly, since the businesses from which they purchase will be forced to increase their prices to cover the increased costs.
Also, in the last two budgets, there was hardly any provision included that was aimed at stimulating the positive generation of wealth. Areas of wealth-generation were completely neglected or forgotten. For example, agriculture, both small-scale garden farmers and producers of cash crops, as well as the national, economically important sugar and rice industries were literally ignored. It was only recently that a small market for rice was secured. As we have seen over the past year, to diminish or not to stimulate these industries results in unemployment, less money in circulation, and the lessening of a source of foreign exchange.
As we had stated before, the makers of governmental policies in respect to agriculture are literally shooting themselves in the foot, and one could only hope that they would awake from their slumber.
In other areas of wealth-generation for society, especially mining and commerce, the same trend has occurred.
Further, one of the greatest disincentives to wealth generation is massive taxation. This is a fact well known in all societies, irrespective of the political doctrine they follow. In the 2017 Budget, there were dozens of new taxes imposed, and citizens are feeling the squeeze. The Government cannot reasonably expect to fund its operations via revenues from taxes alone; it must focus on stimulating growth and creating the environment for new investments etc.
It is of no surprise that, at the recent Business Summit, the Government’s approach to taxation came under heavy scrutiny, with many of the stakeholders calling for a complete review. Of note, too, is that, during the discussions, it was pointed out that most of the measures that had been recommended by the Tax Reform Committee — aimed at ensuring persons have more disposal income and supporting local businesses etc — remain unimplemented.
In addition to tax incentives, the committee had recommended the Administration increase the Value-Added Tax registration threshold from G million to G million; reduce the standard rate to 14 per cent; and introduce an intermediate rate of 7 per cent for some types of goods. Increasing the threshold for businesses would mean that, in addition to the reduced tax charged, businesses with a turnover of less than G million would not have to fall into the accounting regime.
The Committee had also recommended that education services be exempted from taxation; and 21 items of education materials, including all textbooks, children’s books, dictionaries, pencils, lunch kits and charts, continue to be zero-rated; while others, including recipe books, instructional newsletters and music manuscripts, be charged at an intermediate rate of 7%.
These are just a few of the issues which the Government must consider in preparation of Budget 2018. The general feeling is that Government’s tax-oriented approach to growth and policies is among the key factors responsible for the deteriorating economy. If Government is really serious about national development and creating the ‘good life’ for all Guyanese, it must urgently change its policies in relation to the unfriendly, burdensome tax regime, and put systems in place to stimulate real economic growth. In this regard, the 2018 Budget will serve as another test for the Administration.
