…but wants relief from high energy costs, lowering of tax on commercial businesses

The Private Sector Commission has commended Finance Minister, Winston Jordan on yet another early budget, hailing some of the measures, but expressed concerns that no provision was made for relief on energy costs, which it said were stifling businesses.
In a statement the PSC said the early budget set at $300.7B provides the opportunity to begin the year on a pre-charted course.

The commission noted that in consultation with the minister as the budget was being crafted, it made a number of recommendations, chief among which was the gradual lowering of the corporate tax rate over a period of ten years to 20 per cent. “The commission is therefore pleased at the reduction to 25 per cent which was announced for 2019 and signals a commitment to this mutual goal,” the PSC statement said.

It added: “We are happy too that Budget 2019 contains several measures such as the raising of the tax threshold, which the commission had proposed for the relief of the tax burden upon employees, and the monies earmarked for hinterland airstrips. Also gratifying is the provision for the differently abled, a demographic which is often neglected.”

Meanwhile, the PSC said it is cognisant of the need to incentivise the manufacturing sector but would have hoped that, given the substantial contribution of the services sector to the country’s Gross Domestic Product, consideration would have been given to reducing the tax rate for commercial businesses “from the draconian 40 per cent as this is having an adverse effect on legitimate businesses.” However, the business umbrella body said it is pleased that plans have been announced for the construction of the Linden-Lethem road, which will ease the woes of businesses and residents who depend on this corridor for their livelihood.

“The dire need for the East Bank road, which had been proposed by the commission, has also been addressed and the commission is heartened that the development of modern Port Georgetown is being addressed,” the statement read. “We are, however, concerned about the level of proposed overall tax revenue on businesses and individuals as Budget 2019 projects a 9.9 per cent increase in revenue while the economy is projected to grow by 4.6 per cent. Most importantly, there is no provision for relief on energy costs which are stifling businesses. Worrying too is the impact of Budget 2019 upon the foreign reserves of the Central Bank; an impact that does not appear to have taken cognisance of the need to cushion against external shocks to which the country and its currency are vulnerable,” the PSC said.

Jordan on Monday unveiled a range of measures to help the private sector here during the presentation of the budget in the National Assembly on Monday. “Mr. Speaker, in Budget 2018, I announced a series of measures designed to simplify the tax regime applicable to the gold and diamond sector. Specifically, I indicated an intention to amend Section 33 (E) (1) of the Income Tax Act to allow for the tax to be assessed based on a sliding scale, and that such a tax would be a final tax on income from gold mining activities.

Unfortunately, the law did not make this explicit. I now propose to amend the law to treat as a final tax, the tax assessed on income derived from gold mining activities. It will also be made clear that this final tax relates only to declarations made to the Guyana Gold Board; that the income must be from individual gold mining and not from the sale of gold or the rental of blocks; that income from other sources are excluded from this tax treatment,” Jordan stated.

Jordan said that in 2017, the non-commercial or manufacturing rate was reduced from 30 per cent to 27.5 per cent. This enabled these businesses to improve their profit margins, thereby allowing for new investment and capitalisation. He said that following visits to several businesses, and in an effort to boost activities in the sector, he proposes to further reduce the manufacturing and non-commercial rate to 25 per cent, with effect from Year of Income January 1, 2019. This measure, which keeps a promise by government to reduce the manufacturing rate to 25 per cent before the end of our first term, will cost $1.1 billion.

Property Tax – Individual and Companies
In an effort to restore equity and consistency in the tax regime between individuals and companies, and to further reduce the burden of Property Tax and Capital Gains Tax, I propose the following: An increase in the threshold for filing a return for: individuals, from the current net property of $1.5 million to $40 million; and for companies, from $0.5 million to $40 million. A reduction in the current rate for both individuals and companies from 0.75 per cent to 0.5 per cent for the first $20 million in taxable net property, and the remainder being taxed at 0.75 per cent.