With the newly proposed tax measures on remittances from the United States of America (USA) to foreign countries including Guyana, which economists predict will dry up these funds, the Guyana Government has no solution except to “wait and see.”
According to Minister of State Joseph Harmon, there is little the Government can do at this time. During a post-Cabinet press briefing, the Minister asserted that the measure will have an effect on the country.
Minister of State Joseph Harmon
“As the saying goes when certain people sneeze, everyone else catches a cold. When the American’s make their laws, we have to deal with the consequences of it. What I can say is that it means it will cost you more to send money from the United States to Guyana.”
“As you know, remittances have been a major plank in the sustenance of many families in this country. And I think it is going to have an impact on them,” Harmon said. “But we will have to look and see what happens. It may be that instead of getting a hundred dollars, you get ninety.”
But the Minister went on to stress that “there is nothing really we as a State can do about the way another country makes its laws. All we can say is encourage those who send money to their families here to increase the amount.”
It is expected that the United States congress may make an amendment to the US Electronic Fund Transfer Act to impose a fee for remittance transfers to certain foreign countries, including Guyana.
The bill, which is titled Border Wall Funding Act of 2017 (HR 1813), has already been introduced in the US House of Representatives by Congressman Mike Rogers, of Alabama’s 3rd Congressional District.
In introducing the Bill on March 30, 2017, Rogers claimed that remittances are normally used by illegal immigrants to move money from the US to their home countries.
In order to put a restriction on this, Rogers said the Bill will seek to allow for a two per cent fee charged on individuals sending money to recipients in 42 countries in Latin America and the Caribbean.
When asked about the measure, former Foreign Affairs Minister, Dr Henry Jeffrey told this publication that, if successful, the Bill will cause severe problems not only in Guyana, but the wider Caribbean and Latin American region.
“In the case of Guyana, we can lose somewhere between $25-40 million and that’s a lot of money for a small country like ours,” Dr Jeffrey stated, while explaining that regardless of the circumstances, people will find other means by which to send finances to their home country.
Symbolic of its significance, remittances contributed to 11.2 per cent of Guyana’s Gross Domestic Product in 2016, a decline from 14 per cent in 2015. This was as a result of net current transfers decreasing by 23.1 per cent or US$95 million over 2016, reflecting a drastic reduction of workers remittance from abroad into Guyana.
Guyana is just a drop in the global remittance trade which in 2016 was pegged at US$441,000 billion; Guyana received in 2016 only US$320 million of that amount.
The largest destination for remittances from the US is Mexico, which Pew Research estimates was equal to US$24 billion in 2015.
