…says estimates big on taxes, unresourceful

By Vanessa Braithwaite
MINISTER of Finance Winston Jordan and the Coalition Government on Monday came in for much criticisms from the Opposition Leader, Bharrat Jagdeo and his fellow party members after being audience to an over three hour $250 Billion budget speech presented by Jordan.

During a news conference immediately after the budget presentation, Jagdeo, accompanied by members of Parliament, Bishop Juan Edgill and Irfaan Ali described the budget as a ‘taxation budget’ and “immensely unresourceful.”

Jagdeo said he was prepared to listen to a pro-growth budget but instead was forced to listen to a speech filled with cliché’s and repetitions and scanty information. Backing up his opinion, the former President alluded to the several items and services that have now been deemed taxable and the impact that will have on the ordinary man, the economy and the investment sector.

“In all my lifetime this was probably the worst budget I have ever seen, the budget that brought in the most taxes in the history of our country and in a fundamental way has destroyed any possibility of any recovery in our economy, it will create more hardships for thousands of people,” Jagdeo, a Russian trained economist argued.

Decrease on the VAT by 2%
The opposition leader expressed concerns about the taxation that has been placed on several items, even those locally produced and basic services such as electricity and water. These criticisms came even as Minister Jordan announced a 2% decrease on the value added tax (VAT).

Minister Jordan, in his presentation projected that revenue is expected to increase by 8.9 percent to $162.6 billion, reflecting a considerable increase in collections of VAT, due to the measures to be implemented, in 2017. Higher revenues are also supported by an increase of 15.1 percent in excise tax collections, which are projected to reach $34.4 billion, in 2017.

He revealed that there is an expansion of zero-rated items; however these exclude those pertaining to exports and manufacturing inputs. These exclusions, in addition to the announcement of the 14% taxation on water consumption over $1,500 and electricity consumption over $10, 000 came in for high condemnations as Jagdeo argued that the grass root people, the normal man on the street is who will be affected. “Poor people and mothers, single- parents who have to find milk for their babies now have to pay vat on the milk…how could this be helpful to anyone,” Jagdeo said.

This new tax regime, the Opposition Members concluded, will bring disincentives to the ordinary people, to investors and will be immensely ominous for the future of Guyana, for job creation and growth and business development. The trio affirmed that the highly taxed budget will find its funding in the local financial markets, which will create unwarranted competition with the private sector that will also be seeking funds from the same market.

“What this will do, it will compete with the private sector for funds because they will both be seeking funds from the same market, the capital markets. If you have greater competitions for funds, interest rates will rise and therefore choke off growth in the future, and it will have that major impact in the country…a lot of people will be discouraged from investing because the state will be sucking up most of the liquidity in the system.”Jagdeo said.

Unplanned projects
Another area that was criticized is the several infrastructural projects that will be embarked on in 2017 such as the Linden to Lethem highway that will cost the state in totality $80B. According to Jordan, the Linden to Lethem corridor is essential for creating a link between our road and sea transportation networks. “We intend to exploit the competitive advantage of our strategic geo-physical and geo-political location on the South American mainland along the Atlantic Coast. In this regard, in 2017, our Government will commence the first phase of the Linden to Lethem road project which spans Linden to Mabura Hill.”

Alluding to this particular project, Jagdeo said that it was not well thought out and no feasibility study was done. “At this point in time given the traffic flow to Brazil and Guyana that it is unsustainable to spend US$400M on a road of that nature which is $80B in the long run so a lot of these ideas I believe were not well thought out.”

The green economy
Jagdeo also rubbished the Finance Minister’s claims that the budget is advocating for a diversified green economy according to the theme “Building a Diversified, Green Economy: Delivering the Good Life to All Guyanese”. He posited that the 2017 budget is an articulation of a Green Agenda, which spans social, environmental, and economic sustainability issues.

“Mr. Speaker, overall, the renewable energy and energy efficiency interventions in 2017 will result in annual energy savings of approximately 2.8 GWh or 1,800 barrels of oil equivalent per year and an annual cost saving of approximately $193 million, and avoided carbon dioxide emissions of 1,674 tonnes per year.” To achieve the goal of the green economy, several tax exemptions will be placed on the importation of products and services that will show appreciation for this vision.

The PPP however poured cold water on these plans saying that it is actually going to stifle the green economy rather than to promote it. The Opposition leader described his conclusions and arguments as preliminary as he did not carefully sift through the budget as yet but from listening to the presentation he is extremely disappointed and very concerned on its effects on the common man. He also expressed concern on several sectors such as the mining sector which he said will not benefit the sugar sector, the business sector and the contracting sector among others.