…says budget ‘less business friendly’

SUBSCRIBERS to Internet services from the Guyana Telephone and Telegraph Company

(GTT) may find themselves paying more for their service should the Government enforce its tax-based proposals in the 2017 budget.
Speaking on Friday during a press conference hosted by the Private Sector Commission (PSC) on Waterloo Street, Georgetown, the company’s Chief Executive Officer (CEO) Justin Nedd described the budget as “less business- friendly” than previous ones.
According to Nedd, some tax measures as indicated by Finance Minister Winston Jordan will allow for increased rates and noted that “businesses cannot absorb that increase which will inevitably be passed to some consumers.

“When we look at the budget from the telecommunications sector, we notice that our income tax, corporate tax rate is still 45 per cent, while we see non-commercial businesses now 27.5 per cent and we actually compete against players that pay non-commercial business rates. That means we are going to pay at least 20 per cent more corporate tax than some of our competitors,” said Nedd.
The CEO said he, along with other members of the private sector, were stunned at Government’s proposals regarding VAT, noting that if implemented as interpreted “we see the harmful impact to the consumer and this is what I would consider 180 degree inconsistency with the goal of bridging that digital divide… and modernising the sector.”

Nedd argued that if VAT is placed on data, whether broadband, Internet, mobile phone or for corporate customers, there would be an increase of US$6M per year for the current services.
“I would like to say US$6M that would have to be passed to the customers which would stymie demand for services and create a negative cycle – how much we are able to invest in growth—we are well aware of the demands for increased Internet speeds and that negative cycle will only reduce the ability of the company to grow.”

Nedd gave the assurance that GTT is looking forward to major expansion projects in the area of increased Internet speeds through fibre-optics, “but the business case for that is now significantly changed given the increased cost to consumers.”
“This budget is still in its draft form and I am really looking forward to possible consultations with Government to get more clarity,” Nedd said, noting that GTT is still trying to pull the pieces together, especially if the changes take effect on January 1.

“We’ve got a lot of work to do. We want the media and customers to understand what this really means… it is beyond the basic needs of water and electricity; it will impact the Internet also. Having said that though, we are definitely committed to Guyana as a company, and will work with the Government to bridge the digital divide,” he said.
Meanwhile, PSC Secretary Ramesh Dookhoo said the proposed imposition of the environmental tax will prove burdensome on company’s such a Banks DIH Limited.

Jordan had proposed the imposition of an environmental levy of $10 per unit on the importers and local manufacturers of products using non-returnable metal, plastic or glass containers of any alcoholic or non-alcoholic beverage.
But according to Dookhoo, this will negatively impact consumers’ disposable income. The manufacturer will be paying the cost plus maintenance of his Environment Protection Agency (EPA) licence plus the $10, while the importer will be paying $10 only.
For one manufacturer that amounts to $600M per year plus a possible total tax, at $10, of $900M, Jordan said in his presentation.

Dookhoo said in the case of Banks DIH, that company has to pay $10M to process its environmental permit, while the cost of maintaining the requirements of the EPA legislation is $600M. And he noted that the introduction of the $10 will result in the company paying $1B.
“Is it fair to the manufacturer to pay the $10 and pay the maintenance of the licence and buy the equipment that is environmentally-friendly and maintain those equipment?” he asked rhetorically.
On the issue of the Excise stamp system, the PSC representatives accepted that the new system will aid in the curbing of smuggling, but objected to negative utterances on alcohol consumption.

As such, Dookhoo disclosed that large alcohol producers, distributors and importers are in the process of signing a code of conduct that seeks to govern the manufacturing, distribution and sale of alcohol.