Labour Movement welcomes 2013 Budget – FITUG says budget caters for the working class and poor

PRESIDENT of the Federation of Independent Trade Unions of Guyana (FITUG), Mr. Carvil Duncan has declared that the 2013 budget caters for the working class and poor and welcomed the budget.

altHe said FITUG recognises that the various measures, as summarised below, cushions workers from tariff increases (GPL and Region 10), increases disposable income via reduction of tax rates and deduction of mortgage interest, supports employment (as with GuySuCo support), and supports the poor and elderly via a 25% pension increase.
According to Duncan, FITUG also recognises the challenge of balancing the demands of expanding Government services via the social sectors and infrastructure, against budget measures to increase the level of disposable income, particularly for the poor and working class.
Considering the large support for the electricity sector and the sugar sector, he said the budget measures can be considered reasonable.
FITUG recognises the continued growth in the economy, now in its 7th year, and the strong macro-position, and recognises that the hard work and careful policies of the Government and the Minister of Finance has contributed to this.

FITUG said it recognises that the following budget measures are all positive for workers and the poor:

1. Support to the Sugar Industry – provides an amount of $1 billion to be transferred by Government to GUYSUCO to help the company meet the financing requirements of its transformation plans. This support by Government to the sugar industry will benefit the industry’s 18,000 workers, their families, and suppliers of goods and services to the company. Together, more than 120,000 persons will benefit directly or indirectly

2. Support to the Guyana Power and Light Inc. – provides operating and capital transfers to GPL totalling $5.8 billion to support that company in meeting its cash flow requirements.  The allocations to the electricity sector will benefit all 166,000 of GPL’s customers and their families and avoid tariff increases.

3. Linden Electricity–allocates sums totalling $2.9 billion to meet the cost of maintaining the electricity subsidy in Linden and Kwakwani so that 10,363 electricity customers in Region 10 can continue to benefit from the currently prevailing rates through the remainder of the year. At current rates, this translates to a benefit of $279,801 per electricity customer per annum or $23,317 per month. We continue to urge timely completion of the Committee’s deliberations so that this matter can be brought to conclusion.

4. Old Age Pensions — provides for the old age pension to be increased to $12,500 per month, an increase of 25 percent with effect from May 1, 2013. The annual impact of this increase would result in an additional $1.3 billion of disposable income being placed in the hands of 42,500 senior citizens, and will bring the overall old age pension bill to a total of $6 billion in 2013.

5. OAP Electricity Assistance Programme – provides for each old age pensioner with assistance of up to $20,000 per annum to pay GPL for electricity charges incurred. This assistance will reduce the electricity charges that will have to be met by each pensioner who is a GPL customer, and will have the effect of increasing the disposable income of our senior citizen population by a further $590 million per annum.

6. National Insurance Scheme–To cushion a 1% increase in contribution rates, Government will meet both the employer’s and the employee’s share of the increase in contribution payable with respect to employed persons whose income is not more than $50,000 per month which will benefit some 58,300 contributors.

7. Property Tax on Individuals–with effect from year of assessment 2014, individuals will be charged at the following rates. The first $40 million of net property will be taxed at zero percent, and the remainder of net property will be taxed at 0.75 percent; given that the current tax free threshold for property tax on individuals is $7.5 million, the new threshold of  $40 million, will  result in  tens of thousands of low and middle income earners with net property below $40 million will no longer be subject to property tax.

8. Mortgage Interest Relief–with effect from year of income 2013, first time home owners who are holders of mortgage loans of up to $30 million granted to them by commercial banks or the building society will be permitted to deduct the interest they pay on such mortgages from their taxable income for the purposes of personal income tax. In other words, that portion of taxable income used by a first time home owner to pay interest on a housing loan of up to $30 million from a commercial bank or building society will be exempt from personal income tax.

9. Personal Income Tax–with effect from year of income 2013, personal income tax will be charged on income above the current threshold of $50,000 per month or $600,000 per annum at a rate of 30 percent instead of 33? percent. As a result of this reduction in the personal income tax rate, more than 184,000 taxpayers will benefit with higher take home pay, and an additional $1.8 billion of disposable income will be placed annually in the hands of the taxpaying public.

“FITUG wishes to support the 2013 budget which has to be seen in the context of  more persons being able to afford their own home and witnessing disposable income rising each year,” Mr. Duncan declared.

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