…higher salaries to come with greater output
PRIME Minister Sam Hinds, during his budget contribution last week, said government decided to leave alone the rate of corporation tax for telephone companies because it is of the view that these companies can afford the taxes. “Telephone companies…are doing well enough in Guyana and can continue to shoulder the existing tax rate,” he said. In the budget measures announced during the presentation by Minister of Finance, Dr. Ashni Singh, two weeks ago, it was disclosed that the 45 percent corporation tax was to be reduced to 40 percent, with the exception of telephone companies. And non-commercial companies will be required to pay a rate of 30 percent corporation tax, down from 35 percent.
Further, the Prime Minister urged for a rethink by critics of the budget who lament the levels of increases in the announced measures, and warned that less than prudent spending could lead down to a path of ruin.
Speaking on Friday, Hinds lauded government’s budget, noting that it was larger than the previous year’s and more so, did not have new taxes, but rather increased the threshold for income tax.
“The budget is not larger because the Honourable Minister of Finance contrived to make it so; rather, it reflects the progress of our economy. On the revenue side, it reflects the growth of our national economy; and on the expenditure side, seeks to sustain and enhance that growth as well as to reset, refine and signal the direction of continuing growth,” he said.
He stressed that growth of the whole requires growth all around.
“Mr. Speaker, we can see these features in our economy growing all around. Some people say that our budgets sound much like each other, from one year to the other, and this is so…the layout is much the same. It is a logical, informative layout, starting with the international background and proceeding with the many particulars, which give a fair and balanced picture of where we are coming from, where we are, and where we are going. Like a plant that grows with nurturing, that is the way our economy has been growing, with the attentive, knowledgeable and loving care of this PPP/C administration,” he said.
He said as one listened to the budget, one had the sense of progress, continuity, change and transformation from stage to stage.
“Mr. Speaker, we have had repeated criticisms that this budget is an elections budget…” he said. However, he countered by saying such a budget would not have been following the pattern of the previous budgets “as this budget is.”
He said, “Whoever describes this budget as an elections budget should be called on and made to look at the characteristics of an elections budget, in particular the deficit.” He pointed out that the deficit as stated in the 2011 budget is 3.0 percent. “Small, reflecting the financial discipline that leads to prosperity, which the PPP has always been wedded to since its first budgets in our pre-independence period. If this were an elections budget, spending to buy votes would have led to a deficit of about 9 percent, which in itself would have been defensible, when one looks at deficits run by many countries, developed and developing,” said the Prime Minister.
He said that the previous administration ran up deficits in the order of 30 percent, “so if we had moved to 9 percent it would have been defensible; but we have resisted that and have held to the 3 percent, as in previous years.”
He said that on considering the history of the country, no group has sacrificed more and paid more dues to keep Guyana together than the PPP and the PPP/C.
The theme of the budget states, “We have a country to build. It will not build itself, and we have to build today for tomorrow.”
He said: “We cannot consume and enjoy all we could today, but must put aside something for tomorrow and that is an obligation for each of us. This budget, by its theme, calls on every Guyanese to take part in the building of Guyana. Each of us has to do something…all that we could do, each in our own way for the better tomorrow.”
The Prime Minister said that the government is working for the day when it could pay more. “This budget is about producing more, having more with which to pay and paying more. Pay is about distribution, but there must be firstly things to distribute, things to be produced through our work…this budget and its theme call on every Guyanese to put his or her shoulder to the wheel,” he said.
He noted that it would not be feasible to pay at a level of more than is being produced, or pay cannot be determined based on “what we think we are worth.”
Paying higher wages without the production of the matching goods and services leads to increasing inflation, as seen in Guyana during the previous administration, he said. This was only halted by the painful medicine that Guyana had to “drink” in the late 1980s, “and we will give the late President [Hugh Desmond] Hoyte honours for initiating that.”
He noted that the period of rampant inflation contributed greatly to the breakdown of society and the resort to living outside the law. “We don’t want to go there again,” he said. “Let us not go into the direction of wages and salaries which could not be sustained, which are not with what is happening in the production area and in the market place,” he said.
“We in the PPP/C do want a road to a better life…we are not against a better life, but what we are saying is that we have to get to that better life through our work and through sustained increases in pay, in line with increases in production and productivity,” he said. “We know that could do it…we of the PPP/C we know we could do it. Our past 18 years have shown that we could do it,” he said. “This budget of 2011 and all of our preceding budgets are about keeping us on the straight and narrow path which leads to prosperity, resisting the alluring deceptions of paths which may flatter us today, but take us tomorrow back along the path of the first 20 years of independence” he said.
On VAT, the Prime Minister said that the tax, introduced in 2007, takes proportionately more from those who have more and proportionately less from those who have less.
“The person with more money who buys and enjoys goods and services contributes more to the government coffers,” he said.
“No VAT is charged on basic food, basic education and basic health, and some basic building material,” he said.