…gov’t waives taxes on public servants’ salary increases

THE A Partnership for National Unity + Alliance For Change (APNU+AFC) government has waived the taxes on the retroactive pay hike for public servants, according to a notice published in the Official Gazette.
The government recently approved increases for all public servants, ranging from 0.5% to 7% for 2018, Finance Minister Winston Jordan has confirmed.
Finance Minister Winston Jordan is quoted in the Gazette as saying: “In exercise of the powers conferred upon me by the Section 105 of the Income Tax Act, cap. 81:01, I hereby make the following regulations:-

“1: These regulations may be cited as the Income Tax (Special Provisions) Regulations for the waiver of taxes on the retroactive percentage increase in salaries for employees/public servants, and public officers in the employ of the Government of the Co-operative Republic of Guyana for the period January 01, 2018 to and ending December 31, 2018.

“2: These regulations shall come into operation with effect from January 01, 2018.

“3: There shall be exempt from the tax –
(a) The retroactive percentage increase in salary for the period beginning January 01, 2018 and ending December 31, 2018, for employees/ public servants, and public officers in the employ of the Government of the Co-operative Republic of Guyana.”

In a circular issued on Monday, November 19, the Financial Secretary of the Ministry of Finance informed all heads of budget agencies that the increases have been approved for all public servants; that they will take effect from January 1, 2018, and as such would be paid retroactively.

According to the circular, public servants that earned up to $100,000 as of December 31, 2018, will receive a seven per cent increase, while public servants that acquired salaries between $100,000 and $299,999 will receive a 6.5 per cent increase.

Public servants whose salaries ranged between $300,000 and $499.999 will receive a five per cent increase; those that fall within the $500,000 to $699,999 bracket will receive three per cent increase; $700,000 to $799,999, a two per cent increase; $800,000 to $999,999, a one per cent; and those earning one million dollars and above would receive a 0.5 per cent increase.

The ministry noted that the increases are payable to workers who were employed as at the November 2018 payroll, and according to the circular, the increase is applicable to “all traditional public servants, defined to mean those employed in ministries, departments not under ministerial control, regional administrators, and Public Service-related agencies, i.e., commissions, secretariats and those who are engaged on contract positions reflected on the inventory of authorised positions of the traditional Public Service and persons on contract outside on the inventorised positions.”

It is also applicable to all members of the Disciplined Services, but not to teachers, employees of the University of Guyana, and ministers and Members of Parliament.

SEPARATE CIRCULAR
A separate circular has been issued to address increases for teachers in keeping with the Memorandum of Agreement between the Ministry of Education and the Guyana Teachers’ Union (GTU) signed on October 24, 2018.
Just last Sunday, Minister Jordan, in a Letter to the Editor, said public servants can expect salary increases, especially in the next three years. He also announced that Old Age Pension, which now stands at $19,500 per month, will be further increased when the National Budget is presented tomorrow.

The announcements were in response to an article by trade unionist Lincoln Lewis, which, under the headline “Local Government Elections, though disappointing to some, were not unexpected”, touched on a number of issues, including the increase in salaries for Cabinet ministers as well as Members of Parliament and the payment of year-end bonuses to members of the Disciplined Services.

In addressing the issue of the bonus to members of the Disciplined Services, Minister Jordan explained that for many years, the previous People’s Progressive Party/Civic (PPP-C) administration had adopted the practice of paying less to public sector workers, so as to retain a certain amount to pay year-end bonuses to workers in the Disciplined Services only.
Said Jordan, who worked as the finance ministry’s budget director for several years when the PPP/C was in power:

“Recall that the standard wage increase was five per cent per annum, resulting in the paltry minimum wage of $39,570 in 2015. But a higher percentage has been budgeted to pay increases to all workers across-the-board.

“The difference in the two percentages was used to finance the one-month bonus to the Disciplined Services. Even in cases where funds remained after paying the bonuses, the previous administration refused to use them to pay the other public sector workers, preferring to return them to the Treasury.”

He said it is a policy of the coalition government that all workers must benefit if there are excess resources that can be shared. Hence, in 2015 and 2016, all workers benefited from the payment of bonuses of $50,000 and $25,000, respectively.

FINANCIAL CHALLENGES
Acknowledging that since 2017, the government has had to grapple with financial challenges that have precluded paying bonuses Minister Jordan said:
“However, we have paid salary increases beyond the “five-per-cent”, such that the minimum wage has rapidly increased by nearly 52 per cent in two years, from $39,570 in 2015 to $60,000 in 2017.

“It took the PPP-C administration nine years to move the minimum wage by a similar percentage, or from $26,070 in 2006 to $39,570 in 2015.
“All workers can expect salary increases, going forward, especially in 2018, 2019 and 2020.”

The finance minister said what he found particularly nauseating was Mr. Lewis’s attempt to connect the lower voter turnout by the Disciplined Services to the ending of the one-month bonus.
“I firmly believe that our hard-fought right to vote cannot be so easily and callously sacrificed for the proverbial “40 pieces of silver.”