CRAFTING economic policies based on what is popular in a particular period may be a governance decision that could result in the gradual loss of wealth for Guyana, according to President Bharrat Jagdeo.
Speaking at the recent Annual General Meeting of the Georgetown Chamber of Commerce and Industry (GCCI), President Bharrat Jagdeo said Guyana’s success in accumulating wealth over the years should not be undermined by populism.
“You can have periods of seeming prosperity and then someone always has to pay the bill; and if you live above your means for sustained periods, eventually you have to borrow to do that and there will be a payback time,” President Jagdeo said.
He believes that some of the ambitious manifesto plans touted by some political leaders “sound very good” but lack the carefully thought-out medium and long-term financial implications.
“People speak glibly about spending US$2B or US$3B on infrastructure; and even if you can raise the money, you shouldn’t spend it because the implication that it will have in the future for this country, the wealth you would have to generate to pay that back, would simply not be there,” President Jagdeo said.
Eliminating the corporate tax was another populist perspective which the Head of State vetoed. Adamant that it will never happen, President Jagdeo said the ultimate objective would be to unify the rates to a point somewhere in the vicinity of 25 percent.
With the exception of telephone companies, the commercial companies’ corporate tax rate has been reduced to 40 percent from 45 percent, while non-commercial companies’ corporate tax rate was reduced to 30 percent from 35 percent.
Chairman of the Private Sector Commission, Ramesh Dookhoo, while speaking at the AGM, commended government for the move, opining that it was an issue for which the private sector had been lobbying for many years, optimistic that it will impact investment in Guyana.
Responding to some who may ask why such a decision was not taken earlier to reduce the taxes, President Jagdeo said, “We have decided to do things carefully,” pointing to some governments in the region and Europe that have increased the scale of their Value Added Tax (VAT), and are affected by a wage freeze.
“We have reduced taxes here… we have programmed money in the budget for increase in wages because we have been able to do it over time, carefully… we have to shun populist approaches to managing things,” President Jagdeo said.
(GINA)