— U.S. professor, private sector laud removal of tax burden

BUDGET 2020 has come at time when the country is struggling from the financial effects occasioned by the long delay in the announcement of the elections results and the COVID-19 pandemic. Its revitalisation of the business community along with the removal of tax burdens on the citizenry has set Guyana in the right direction towards recovery.

This is the shared position of several business leaders who engaged in conversation on Guyana’s 2020 budget at a live event hosted by the Guyana Budget and Policy Institute (GBPI) on Saturday night.

In attendance were Chief Executive Officer (CEO) of the Institute of Private Enterprise Development (IPED), Ramesh Persaud; Chairman of the Private Sector Commission (PSC), Nicholas Boyer; Executive Director of the GBPI, Dhanraj Singh; and Professor of Finance at Monroe College, New York, Mahendra Hariraj. It was moderated by Executive Director of the Georgetown Chamber of Commerce and Industry (GCCI), Richard Rambarran.

In providing their thoughts on the $329.5 billion budget, introduced in Parliament on September 9, 2020, the men also explained the benefits to be derived and why they believe it should be welcomed by all Guyanese.

Cutting to the chase, Hariraj said that when one examines the 2020 budget, it is clear that many of the “draconian” tax measures previously implemented by the APNU+AFC were reversed. He explained that this increases the spending capacity of the average person which, in turn, will greatly benefit Guyana.

PEOPLE-FOCUSED

“I think the budget is people-focused, it’s goal-oriented and it’s essentially going to offer the Guyanese people the prosperity and the necessary tools to move the country from a contracting situation to more of an expansionary situation,” he said.

While persons have questioned the private sector’s interest in the country’s budget and the measures embedded within, Boyer was able to explain that the policies that a government pursues inform the private sector on the areas best to invest in. He said that Budget 2020 pays attention to Guyana’s primary sectors and it is through these sectors that the country gets its exports which bring in foreign currency which is then used by the local services sector to support the every-day needs of citizens.

“Everything starts with the productive sector. So, understanding the policies that were brought in this budget; how those policies affect the productive sector is very important,” he said.

As an example, he commended the government’s decision to amend the log export policy to allow saw millers to export logs, which will boost industrial production and revenues. Boyer said that this move is “significant” as all logging communities are now earning and therefore spending more which will further stimulate the economy.

Meanwhile, Ramesh Persaud agrees that Budget 2020 will increase disposable income and averages that this will increase annually between $50,000 to $200,000 per annum. In dissecting his calculation, he said that he took into consideration the $25,000 COVID-19 relief grant to vulnerable households; the $15,000 cash grant per child; almost $5,000 additional for pensioners, and other savings through the removal of Value-Added Tax (VAT) or services now free to pensioners.

“So, 200,000 households having an additional $50,000 in disposable income created for them, that sounds like about $10 billion right away being made available for spending,” Persaud said.

MORE DISPOSABLE INCOME

He continued that the removal of VAT on materials for the construction sector will save Guyanese hundreds of thousands of dollars relative to the estimated cost of construction and this adds to their savings and disposable income.

Regarding the allowed importation of half-cut vehicles, vehicles over eight years old, and used tyres as catered for the budget, Persaud said that this could save some as much as $500,000 when buying a car while the overall annual maintenance of motor vehicles can be reduced by as much as $30,000 by using properly-regulated tyres.

He said: “We have been contracting as an economy due to COVID-19. A lot of people are out of jobs, more than what they were prior to now. So, this is going to really inspire businesses to keep their staff on longer and also encourages businesses to restart in some aspects to get their staffing back.” Persaud said that back in 2016, he had objected to the budget being “anti-business” and “anti-middle class” and he pleased that much of this has been reversed.

MAJOR STAKEHOLDER

He said that while some have written off businesses and the private sector as being only interested in tax waivers, persons must appreciate that the business community is a major stakeholder for the government as it generates revenue.

Dhanraj Singh agreed with Persaud. He said that while former Minister of Finance, Winston Jordan, has criticised the 2020 budget as “eroding the revenue base” through its benefits to the private sector, the former administration eroded the revenue base by taxing persons into poverty.

“There is something as an optimal level of taxation and beyond that point, a dollar more in taxes is hurting the economy and I think the last government has gone way past that level. The current administration, the Ali Administration, did the quite correct thing which is to bring that level back down,” he said.

Guyana is already nine months into 2020, but a protracted electoral process had restricted the country from having a budget and a clear plan for the year. In just 21 days after settling into office, the People’s Progressive Party Civic (PPP/C) completed the budget which tackles the needs of the economy based on consultation with the requisite stakeholders.