By Imran Khan
Director of Public Information

THERE were three aspects of Budget 2016 which became hot-button topics. Politicos, private sector representatives and various other persons weighed in via the letter columns, media interviews and talk shows and on social media.

There were the announcements by Finance Minister Winston Jordan as follows:

(i) Increase in fees for various licences.
(ii) (a) Removal of the excise tax on motor vehicles under four years old and under 1500cc, bringing the effective tax rate down from 118.7% to 68.2%.
(b) Reduction of excise tax from 50% to 10% for vehicles under four years old between 1500cc and 2000cc, thereby reducing the tax rate from a whopping 152.3% to a more manageable 85%.
(iii) Notice of intent to ban the importation of used tyres and reduced taxes on new tires.

With regard to the increase in licence fees, it was noted that there had been no increases in these for several years and the fees were at a level inconsistent with the social realities. The most glaring example of this is that a gun dealer’s licence fee is set at $7,500 or approximately US$36. This was increased to $150,000 (or US$728). There were nominal increases for shotgun licences (from $2000 to $5000), handgun ($5000 to $25,000) and rifles ($5000 to $40,000). These fees are more in line with economic realities, save and except for persons within our hinterland villages and consideration is being given to offering concessions to such persons.

With regard to the excise tax removal and reduction to encourage the importation of newer vehicles, this is with a view to ensuring that environmental degradation is contained to a minimum from the emissions of exhaust gas. The older vehicles are the more harmful they tend to be to the environment.

The effective tax rates of 118.7% and 152.3% were punitive and prohibitive. There were rates intended, in effect, to fleece the average person who was desirous of importing a reliable vehicle, forcing them instead to settle for older models which could have been sourced at cheaper rates, but which pose a hazard to road users with their increased likelihood for malfunction and inefficiency.

This removal and reduction will allow persons to be able to import better quality vehicles which will offer to them longer years of more reliable service. As President David Granger outlined, Guyana must not accept being viewed and treated as a junkyard for old vehicles which developed countries no longer wish to have on their roadways.

“The auto dealers have a right to express concerns because they feel their profits will be affected, but the government has to think about the whole country. The point is, when you bring in old vehicles, old tyres, old equipment, that (vehicle) is less efficient. It pollutes the atmosphere; it is more costly, because it requires more maintenance and more spare parts; and you get less life out of it,” President Granger reasoned when questioned by the media on the issue.

His Excellency outlined the benefits of importing newer vehicles and insisted that Guyana must look to establishing higher standards than accepting what is commonly referred to in colloquial terms as “lef lef.” “New equipment last longer, and we don’t want developed countries treating us like a junkyard, selling equipment which they can’t use themselves. If they are not going to put up with it because it is inefficient and smokey, why should be put up with it?” the Head of State said.

In addition, older vehicles it is well known and widely accepted are less fuel-efficient and therefore cause a greater burden on the fuel-import bill as they burn more fuel resulting in the need to import more fuel. Older vehicles also have shorter lifespans, are known to have, as His Excellency observed, more mechanical problems and are a bigger financial strain on owners.

Newer vehicles will allow owners to own and use them for longer periods. Think of how few PJJ and PKK vehicles are currently on our roads. Each series churns out approximately 10,000 vehicles. PKK was being issued in 2008, now a mere eight years later hardly any of these 10,000 PKK vehicles are on our roadways. It is a clear indication that used vehicles being imported into Guyana which are oftentimes 10 years or more old hardly give the owners six to eight years of service.

A newer vehicle will give owners 10 years or more service. Well maintained, it can offer well over 10 years. This will also impact on loans to purchase such vehicles as the banking sector is likely to be more encouraged to offer longer repayment terms and not the generally very frugal repayment terms now offered. This being obviously tied to the expected lifespan of the vehicles being purchased.

Additionally, the announcement of the intent to ban the importation of used tires is one which was received with widespread enthusiasm, particularly by those who recognised the imminent dangers used tyres pose to motorists, passengers and pedestrians. Used tyres, too, have a much shorter lifespan and are extremely difficult to dispose of, often resulting in mountains of tires at the dumpsite or the roadsides. These tyres hold stagnant water and this provides a fertile breeding ground for mosquitoes, which can carry a wide range of diseases and infections from malaria to dengue to chikungunya to ZIKA. Used tyres are not only a risk on our roadways but once they are discarded they are part of a national health risk to the citizenry.

Used tyres are more likely to result in “blowouts,” which can lead to fatal accidents, which are already a national pandemic which is slowly being arrested with greater visibility of the police on our roadways.
The budget 2016 announcements by Minister Jordan relating to vehicles and tyres though not entirely palatable to all, are progressive initiatives designed to make Guyana a greener and safer country in terms of road traffic, the environment and minimising health risks. In addition, in the longer term vehicle owners will enjoy the benefit of owning and operating newer and more efficient vehicles which require less maintenance, present less mechanical and operational problems and less demand for replacement parts. Budget 2016 initiates the process of making Guyana a leading model green society, one which we can be proud of in years to come. Note: In the final part we will review the budget debate and some aspects of consideration of the estimates.