THE Private Sector Commission on Monday met with the members of the Tax Reform Committee to discuss a wide range of issues including the reduction of corporation tax. During the meeting the PSC said in a release that it made recommendations on reducing corporate income taxes and PAYE to stimulate the economy and make Guyana’s exports more competitive in the region. The Private Sector Commission advocated that reduction of these taxes would actually lead to increased collection of revenue by the government. The Commission also recommended the zero-rating of additional items for VAT in order to reduce the tax burden on the poor and make for a more equitable taxation system. It was felt too that the Tax Threshold should be increased to $75,000 initially and should be increased by the rate of inflation in each subsequent year.
During the exchange, the members of the Tax Reform Committee made reference to tax studies and reports which were commissioned by the previous administration and which would be taken into consideration by the Committee. These included the recent study of Guyana’s tax system by the Duke University.
Back in August Finance Minister, Winston Jordan had met with members of the Tax Reform Committee. The committee has until December 2015 to produce an interim report from which provisions/announcements can be made in the 2016 national budget. It is chaired by renowned Guyanese Economist, Dr. Maurice Odle and includes tax experts such as Christopher Ram, Godfrey Statia and Dr. Thomas Singh. Speaking with the Government Information Agency (GINA), back then Minister Jordan pointed out that the Committee has been given its Terms of Reference (TOR) which is expected to guide its work and among which includes: to Investigate and inquire into the state of taxation; to review the taxes with a view to achieving a number of objectives, reallocation, distribution, tax incidents; and to look at the administration of taxes with a view to bring about efficiency, rationalization, etc.
“We are aiming to look after all taxes, their structure, their functions, objectives, equity, incidence and fairness and essentially how these taxes are administered because that’s a major issue. I want tax payers to feel that they can pay taxes because they have a friendly tax service. We want a system that is fair and firm and it doesn’t exempt friends of the Government, friends of the tax commissioner, it should be seen by all as fair as it is applied all across the board and it has a rigorous legal system in place that can go after tax dodgers, tax cheats,” the Minister stated.
According to the minister, the committee will not only be looking at how to reduce the Value Added Tax (VAT) but will also be examining all taxes with a view of relieving the burden on the population. “We are going to do tax administration and taxation in a systemic way, informed by evidence and not necessarily being pushed by moral and other so this committee represents the first step in doing that,” Minister Jordan said. Referring to the reduction of VAT as was listed in the APNU+AFC 100 Day Plan, the Minister explained that while the Plan did address reducing the VAT to some percentage point, it was found that it could not be done immediately. “It would have been highly irresponsible for us to just come in, take a major tax category like VAT and just proceed to reduce it in the hope that it would meet some objective or criteria earlier stated,” Jordan said. Minister Jordan had further stated that should this study come out and advise that VAT cannot be reviewed at this stage, then it would be an ‘informed study’, or if the report recommends that VAT be reduced by some percentage point or done gradually over a four to five years period, the government will examine that with a view of implementation.