— from private sector organisations

WHILE measures incorporated into the 2018 Budget will positively impact local businesses, the country’s private sector organisations believe that enough was not done to roll back the negative effects of the 2017 Budget measures.

In 2018, government will reverse the Tributors Tax paid by miners, from 20 per cent to 10 per cent, remove the Value-Added Tax on private education and on logs and rough lumber. Though cognisant of the positive impact that the measures included in the $267.1B National Budget would have on local businesses, the Private Sector Commission (PSC) opined that more could have been done to relieve businesses of the financial burden that came with the 2017 measures.

“We believe that this budget is distinctly absent those measures necessary to sufficiently reverse the negative impact of the measures in the 2017 Budget. For instance, the change of the tax policy from zero-rating to exempt and standard- rated goods and services, the VAT on electricity, the VAT on agricultural and mining machinery and inputs,” the PSC said in a statement on Wednesday.

The PSC said it was also disappointed that there was no clear policy outlined to address a projection on the level of corporate taxation based on which the business community can reasonably plan future investments, though it was recommended to Finance Minister Winston Jordan.

“We note that, with regard to energy, the budget, consistent with government’s long-expressed position, has, all but abandoned the Amaila Falls Hydropower Project, advancing a mix of energy projects, but offers no clear indication of the cost of investment in the energy mix and the future cost of energy per kilowatt hour,” the PSC further added.
Meanwhile, in a separate statement, the Georgetown Chamber of Commerce and Industry (GCCI) expressed high satisfaction with government’s decision to include its proposals in the budget.

PLEASED
“We are pleased with the reversals of tax measures removed from the economy which includes the removal of Value Added Tax (VAT) on education, the reduction in the Tributors Tax from 20 per cent to 10 per cent and the exemption of VAT on the supply of logs and rough lumber to the forestry sector,” the GCCI stated after having a “quick” review of the budget.

According to the GCCI, the $267.1B budget is a step in the right direction. “We also saw the reduction of deposits to GRA for contested assessment reduced to 1/3 of contested amount for Board of Appeal and Judge in Chambers,” the chamber, headed by Deodat Indar said, while emphasising that the finance minister’s consideration and incorporation of the measures are encouraging. It is the hope of the chamber that the dialogue can extend into the future and other areas of policy-making.

However,the GCCI said that the budget fell short in providing a clear direction and incentive regime for the private sector, apart from the Investment Act and Aid of Industry Act. “The chamber is displeased that the fiscal policy initiatives detailed in the budget did not provide stimulus to some main sectors of the economy, and particularly that there has been no reduction to corporate income taxation rate, personal income tax rate or a raising of the tax threshold,” GCCI stated.

The GCCI had lobbied government for a reduction of Corporate Income Tax by 10 per cent through a process of gradualism. The Corporate Income Tax is currently at 35 per cent. Additionally, the GCCI was hopeful that a clear plan would have been articulated as it relates to job creation investment. Government in the 2018 Budget announced that the Guyana Office for Investment (GO-Invest) in 2018 is anticipated to rake in investments totalling $154 billion, with some 5,725 jobs likely to be created.

The ailing sugar industry was another area of concern for the GCC I.
“Also worrisome, is the fact that [there is] no elaboration of a strategy to absorb workers who will be displaced by government’s attempts at GuySuCo’s divestment/curtailment. The government’s efforts to address the economic and social malaise stemming from this divestment were reduced to three sentences in a paragraph and is a great cause for concern, given the industry’s importance and material impact on the economic livelihood of many communities,” the chamber stated. The sugar industry is in line to receive $6.3B in 2018 to support the reduced operations of the Guyana Sugar Corporation (GuySuCo).

More on oil
Meanwhile, in the area of oil and gas, the chamber expressed the view that more details on the budding industry would have been discussed in the budget. “It was anticipated by the chamber that there would have been some elaboration regarding the oil and gas sector and the expected role and recent developments of the Sovereign Wealth Fund (SWF), especially when considering the importance of the SWF to the creation and promotion of a resilient economy.”

The Guyana Manufacturing and Services Association (GMSA) in another statement on Wednesday said while the budget has including several of its recommendations, it does not provide a menu of measures to stimulate and expand the manufacturing sector. “The GMSA was hopeful that proposed measures to address critical areas such as taxation, access to finance, and energy would have been considered. These could have provided a much-needed catalyst for the manufacturing sector to achieve the projected 2.4 per cent growth,” GMSA said in a statement.

It is, however, pleased that several measures that were advocated for the forestry and wood-processing sector have been adopted. These are the exemption of VAT on logs and rough lumber; the budgetary allocation of $120 million to commence a national forest inventory; and budgetary allocation of $50 million to partner with the private sector to establish a consolidated/dimensioned stockyard.

Notwithstanding these interventions, the GMSA is concerned about the continued decline in the forestry sector. Government’s projection of an eight per cent growth of this sector can only be realised through a holistic approach to the sector’s development.