…to correct Jagdeo’s mistakes – VP Ramjattan

TOUGH decisions had to be made in crafting the 2017 National Budget to correct the mistakes made under the Bharrat Jagdeo Administration when it had taken a decision to introduce the Value Added Tax (VAT) at a rate of 16 per cent, Vice President and Minister of Public Security, Khemraj Ramjattan has said.

Speaking during the televised programme – Budget in Focus 2017 – hosted by the Director of Public Information Imran Khan on the National Communications Network (NCN), the vice-president said the $250B Budget was remarkably crafted by Finance Minister Winston Jordan when the global economy is neither contracting nor increasing.
Here in Guyana, the country recorded a 2.6 per cent real economic growth for 2016, a decline from the 4.4 per cent projected earlier this year. At mid-year, a real economic growth rate of 2 per cent was achieved, but several industries and sectors, including sugar, rice, construction and wholesale and retail trade, were showing signs of distress. As such, the projected growth rate for 2016 was revised downwards to 4 per cent. Notwithstanding these challenges, he said the Government for yet another year will be bailing out the sugar industry with a $9B injection.

Nevertheless, he said very hard decisions had to be made by Minister Jordan in order to take the country in the right direction. Explaining the much-talked-about revised tax regime that will take effect on January 1, 2017, Minister Ramjattan said, “Revenue streams” are critical to the development of any country, and as such while the A Partnership for National Unity + Alliance For Change (APNU+AFC) Government had taken a decision to fulfil its manifesto promise of reducing VAT, it was similarly important for the Government to maintain its revenue stream.

He said it is in this context that Budget 2017 must be viewed, explaining that while VAT has been reduced to 14 per cent from a high of 16 per cent, other taxes had to be raised and the tax base expanded to maintain the revenue stream.
“Very tough decisions had to be made and they had to be made this year,” the vice- president said as he applauded the Finance Minister for his “bold” steps.
He said the steps being taken by the Finance Minister are not only bold, but are also corrective measures. The statesman, who has been a Member of Parliament for approximately 25 years, further explained that in 2005 VAT was introduced to Guyana, aimed at raking in approximately $17B.

He said when the overall tax was introduced, it was advised by the experts that it be 12 per cent or less, but then President Bharrat Jagdeo had set the rate at 16 per cent.
“What Mr. Jagdeo and his Government, the PPP then, did…in 2005 although they passed that Act, did not enforce VAT for the entire year 2006, because it was an elections year, but as soon as 2007 came however, on the 1st January, VAT literally came on stream. And you know what was the rate? Sixteen per cent, four more,” Minister Ramjattan posited.
According to him, what the People’s Progressive Party/Civic (PPP/C) Administration had done at the time was to “loot the poor people of this country.”
It was noted that the increase imposed by the Jagdeo Administration had racked up approximately $18B in taxes.

“When they are talking about we are ripping the people off, I want the people to understand, the rip-off happened in 2005,” Minister Ramjattan lamented.
Subsequent to the implementation of VAT, the former President took a decision to place a number of items on a zero-rated list, the vice-president further explained, noting that it was possible for the PPP Administration to do so because of the huge surplus it had acquired.
Approximately 10 years after, the ill-advised decision taken by the then president, is being rectified with VAT being reduced, the vice-president said, while noting that it would have been economically wrong for the Government to retain all of the zero-rated items.
He said if such a decision had been taken, the revenue stream would have shrunk, and as such would have taken a toll on infrastructural and other programmes such as the construction of schools, roads, bridges and hospitals.

“We don’t have that luxury and so we have to make sure that in order to do our social programmes and social projects we have to have that revenue stream,” he emphasised.
Minister Ramjattan also used the opportunity to warn Guyanese about Jagdeo. According to him, Jagdeo, who is now the leader of the Opposition, is a very smart and clever individual with “many faces.”
“He has a face for everything. It is a remarkable trait that he has which is going to impress you,” Minister Ramjattan posited, while further warning Guyanese not be deceived.