GUYANA is on the trajectory of economic inclusiveness, resilience and pro-growth, said Minister within the Ministry of Communities, Dawn Hastings-Williams in her budget presentation to the National Assembly Tuesday evening.“The stance of the recalcitrant Opposition with respect to Budget 2017 is not surprising… they are criticising for the sake of criticising…. But what the populace are not cognisant of Mr. Speaker, is the fact that all of these measures were first introduced by the previous administration, for example VAT,” Minister Hastings- Williams said.

In explaining the true implications and impacts of the proposed adjustment of VAT on water and electricity, the minister said data collected from GWI indicates that the total amount of metered customers stands at 163,359 of which 155,011 or 94 per cent currently pay $1,500 and below.

Minister Hastings-Williams also pointed out that the 14 per cent VAT will cost $1,044 per month for some 8,324 customers who are currently paying $1,500 and more.

“Not to mention these 8,324 customers are hotels, restaurants, Government agencies, malls etc. Mr. Speaker, there is no way that the 14 per cent VAT on water charges will distort consumption pattern with a mere additional charge of $1,044. …This measure will achieve exactly what it sets out to accomplish, and this is to reduce inequality and better position GWI finally to achieve financial break-even,” she told the House.

Adding that for the year 2017 Government had allocated $2.8 B to the water sector in keeping with the 2030 agenda for sustainable development, the Junior Communities Minister said many provisions will be made for the construction and installation of filters, aerators and quality assurance systems at the Central Ruimveldt, Covent Garden, Grove and New Amsterdam water treatment plants.

The water authority will also be upgrading the billing system as it seeks to curb loss reduction.

SOLE OBJECTIVE
Elaborating on VAT on electricity, Minister Hastings-Williams noted that the sole objective is to reduce the dependency on non-renewable energy and turn to cleaner and safer alternative energy sources.

“Mr. Speaker, fuel and lubricant on average make up approximately 28 per cent of our total import bill or 12 per cent of our GDP. Mr. Speaker, with the reduction of energy consumption, Guyana can save millions in foreign exchange,” the Minister said.

Challenging the concept that the cost of production will skyrocket following the introduction of VAT, she pointed out that the cost of electricity in most cases are fixed charges and make up on average 20 per cent of total cost, depending on the nature of the operation.

“Now, Mr. Speaker, if 14 per cent VAT is charged on total electrical cost for that firm, overall the cost of production will increase by a mere 2.8 per cent. And if this burden is passed onto customers, where in some cases it might, in others might not, the increase will surely not exceed 2.8 per cent,” she said.

Adding that in a worst case scenario there can be a 4.5 per cent inflation, Minister Hastings-Williams said it is a golden inflation rate compared to that of 2007 when it was a brutal 14%, and even better than 2008 and 2010 when it was 6.4 per cent and 4.6 per cent respectively.

“Hence, the burden on VAT on electricity will definitely be neutral.”

According to the minister, prudent financial measures that the APNU+AFC Government had adopted since taking up office in mid-2015 is confirmed by the projected reduction in debt to GDP ratio by 1.8 per cent to 46.4 per cent and overall growth in GDP for 2016.

This fiscal space expanded, allowing Guyanese to increase spending to improve overall growth and protect many social gains that were achieved in 2015.

She asserted that spending on infrastructure is a stimulus and “we have for the Guyanese people a $37.2B economic stimulus package, an increase by 158.3 per cent from $14.4 B in 2016. Mr. Speaker, the construction sector will boom. The demand for construction workers, drivers, carpenters etc. will surge.”

Hastings-Williams also said that the mining and quarry industries will increase as demand for sand and stone will grow.

“Private consumption and disposable income will surge, given the high level of propensity to consume.”

Underscoring that in order to have a good life there must be economic and social development, Minister Hastings-Williams said due to the adjustment in the current income tax, everyone will benefit from more money on an annual basis.

“Mr. Speaker, given the meticulous and painstaking analysis in crafting a budget that speaks to the well-being of our people, 2017 will not mark the end of our economic problems, but the beginning of the end, as we welcome the good life in a diversified economy,” Minister Hastings-Williams declared.