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GEORGETOWN, Guyana, CMC – The Guyana government unveiled its first national budget since coming to office in May announcing salary increases for public servants, old age pensioners and removing a number of its from the value added tax (VAT) system.
Finance Minister Winston Jordan presented a GUY$221 billion (One Guyana dollar =US$0.008 cents) budget during a marathon presentation that was boycotted by members of the main opposition People’s Progressive Party Civic (PPP/C).
But former president Bharat Jagdeo, who is expected to be appointed Opposition Leader when the PPP/C legislators end their boycott, told reporters that Jordan was “lengthy in generality and lofty goals in his budget speech, but failed miserably to be specific in policy prescriptions and initiatives to address the pressing issues facing various constituencies in Guyana.
“He shamelessly presented many of the PPP/C administration’s projects and programmes in health, education, housing and water, roads, draining and irrigation, enhancing accountability and the environmental services sector among others as new initiatives. It is seriously underwhelming,” Jagdeo said.
But Jordan told legislators that the fiscal package only covers the remaining months for the 2015 fiscal year.
He said he David Granger government had agreed to increase old age pension by GUY$4000, while public assistance has grown by GUY$600 from September 1.
He said every pensioner will benefit from a 30 per cent increase on the GUY13, 125 monthly allowance.
“Every pensioner, whether he resides in Morawhanna Village in the North or Waiwoi Village in the South, whether in Kawa Valley in the North Pakaraimas or right here in Hadfield Street, in Georgetown, or resident in the Palms Home for Elderly in Brickdam, each will receive GUY$17,000 monthly to assist in meeting their basic needs.
“We have not forgotten those in difficult circumstances. They will see a 10 per cent increase in their public assistance, rising from GUY$5,900 to GUY$6,500 monthly, effective September 1, 2015,” Jordan said, adding that more than 9,360 men and women who are disabled or economically and medically disadvantaged will benefit.
Jordan said the government upon assuming office inherited a “broken” tax system and was now in the process of fixing it.
He said this must be done before there can be a reduction in the value added system (VAT), but is nonetheless increasing the list of zero-rated items that would cost the treasury GUY$680 million.
“Mr. Speaker, it is our fervent hope that retailers will pass on the benefit from the removal of VAT from these items to the consumer, through the lowering of their prices. The estimated loss of revenue is $680 million,” he said.
He told Parliament that the government had found an estimated GUY$55b in tax exemptions and concessions which offset the high tax rates that characterize the system.
“We said that we would “immediately implement a phased reduction of VAT.. However, on our assumption to Office, we found a tax system that is characterized by high tax rates, resulting in innumerable requests for tax exemptions and concessions, which totalled $55 billion, in 2014; an unacceptable level of tax evasion that is clearly unlawful, discriminatory and stifles competition; widespread discretionary elements, which have been used to favour and reward friends, rather than encourage development; and low and/or no compliance.
“In short, the system is broken and we must fix it in a comprehensive manner – one that results in a transparent and predictable tax system that rewards effort, promotes investment, improves our national competitiveness, and removes distortions between and across sectors.”
Jordan also announced an increase, ranging from 17.1 to 26.4 per cent in the minimum basic salary for public servant to GUY$50,000, retroactive to July 1.
The school uniform allowance will be increased to GU $2000 from GUY$1500, while there will be a reduction in the fee to cross the Berbice River Bridge.
In the budget titled ““A Fresh Approach to a Good Life in a Green Economy”, Jordan said that the local economy registered a 3.8 per cent economic growth, down from an original projection of 5.6 per cent and subsequent revised target of 4.5 per cent.
He said inflation during 2014 was 1.2 percent due to low oil prices.
With a Commission of Inquiry continuing its work to determine the future of the loss-making sugar industry, the Finance Minister hinted that the ongoing low production such as the 216,186 tons produced in 2014 was a strong indicator that government would have to examine the implications of the uncompetitive industry.
But he made reference to the good performances in rice, manufacturing and the forestry sectors as major pillars of the growth recorded in 2014.
