‘A leap of faith’
…says PSC on corporation tax revision
THE Private Sector Commission has lauded the 2011 National Budget presented on Monday, saying that the measures contained therein vindicate the representation that the body has been making for years with regard to taxes, and calling the lowering of corporation tax “a leap of faith in the private sector.”
Minister of Finance Dr. Ashni Singh on Monday presented the $161.4B 2011 National Budget in the National Assembly.
“We congratulate the Minister of Finance. We believe that he has made a good case for some of the reforms that have taken place in our country. We believe that, in fact, it is a watershed moment for Guyana, especially in the area of corporate tax reform,” said Chairman of the PSC, Ramesh Dookhoo, at a press conference, at the PSC’s office on Waterloo Street.
This year, the rate for corporation tax has been adjusted downwards from 45 to 40 percent, except for telephone companies. Further, the corporation tax for non-commercial companies has been revised from 40 to 35 percent.
“We believe that the reduction of corporation taxes is a leap of faith in the private sector by the Government of Guyana, and the PSC feels vindicated for its collaborative efforts with Government to bring various matters of the National Competitiveness Strategy to a head,” said the PSC Chairman.
Dookhoo said that in 1970, corporation tax was assessed at the rate 25 and 35 percent (commercial and non-commercial companies respectively.) “That percentage was repealed in 1991, when corporation taxes were 35 and 45 percent. We will recall the kind of economic growth that we enjoy now was not there in those years, and Government has been heavily dependent on taxation for revenue,” said Dookhoo.
He said in 1992, the law was again changed, and a 45 percent implemented on commercial entities. “We are extremely happy that almost 18 years after, we have a situation where we have received some relief in corporation tax and this relief must not be taken lightly. We believe that the reduction in corporate taxes will facilitate the plough-back of more profits into business. The reinvestment patterns of businesses we believe will change. We believe that companies will be a little more well-off to those things that they have only been dreaming about in the past”.
He said the private sector is now in a more competitive mode regarding keeping up with the rest of the Caribbean. “We envisage that in the coming year, an emerged private sector will enjoy the benefits of an also emerging middle class in Guyana. It will drive spending, drive consumption and drive creation of new types of equity and collateral to further lending by banks and other institutions,” he said.
He expressed the belief that the Government of Guyana has moved the engine of growth into another gear, and it is now up to the private sector to capitalise on this opportunity.
“We put much value to the fact that continuous spending in the social sectors has brought the services provided by the state up to a point where it is comparable to countries similar to ours. We urge the Guyanese populace to use these services without exception,” he said.
“We are impressed with the steady increase in old age pension and free water for pensioners, and we continue to urge the Government of Guyana to continue to treat our elderly with the respect they deserve,” he said. “We wish to state categorically that the increase in the threshold will bring unprecedented relief to approximately 40,000 tax-paying workers in Guyana and this means more disposable income in the economy and more dollars in the pockets of the working class,” he said.
“We will continue to take a principled posture of collaborative advocacy and continue to bring a level of technical sophistication to our arguments for various policy reforms in Guyana,” he said.
Commenting on what President Jagdeo said with regard to the size of Guyana’s private sector being modest, Dookhoo said maybe it is time Guyana examines its banking framework with a view to revising upper lending limits so as to allow companies to borrow more sizeable loans. He noted also that Guyana has not reached the stage where it has the expertise in its commercial banks to assess projects and make judgements on their merits or lack thereof.