By Miranda La Rose

The Fiscal Enactments (Amend-ment) Bill 2008 to facilitate tax concessions for two subsidiaries of the Queens Atlantic Investment Inc (QA11) was passed in the National Assembly yesterday without the support of the opposition which felt that the amendments were defective.

AFC MP Khemraj Ramjattan also suggested that President Bharrat Jagdeo should apologise to prominent businessman Yesu Persaud for remarks made about his alleged lack of knowledge of the tax laws and for asking that other companies be given similar concessions as those granted to QAII.

Even before the bill was debated, the Speaker of the National Assembly Ralph Ramkarran called for a 15-minute suspension after AFC MP Sheila holder brought to the attention of the house that the bill was not printed in keeping the parliamentary Standing Orders.
It was discovered that only photocopies of the bill were provided for the opposition while the printed copies were given to the government MPs.

Winston Murray

Leading off the three-and-a-half hour debate which he expected would have been brief, Minister of Finance Dr Ashni Singh said that the amendment was necessary to remedy an error that was made when the bill was passed five years ago.
He said that with the passage of time in which circumstances would have changed it would be necessary to identify new and emerging sectors to attract investment.

The bill, he said was in keeping with strengthening the country’s fiscal and tax administration system while encouraging investment, expanding the economic base through wealth and job creation and poverty reduction.

He noted that since the government enacted the Fiscal Enactments Act in 2003 the government returned to the house several times to ensure greater responsibility in terms of fiscal concession. One such example he said was the government returning to parliament for the zero rating of a number of items that previously attracted Value Added Tax.
In wrapping up the debate Singh spoke of an attractive business climate and referred to more than ten articles published in the Stabroek News in recent years to substantiate his claim.

PNCR-1G MP Winston Murray in his presentation, noting Singh’s brevity, said he observed a lack of conviction in his arguments. Stating that the errors the minister pointed to were in the 2003 act for five years without correction, he said that he has no doubt that the amendment was to facilitate QAII to undertake certain investments which had no legal basis when the government signed the investment agreements with the investor.

There was almost complete silence in the National Assembly when Murray put forward his arguments.
Congratulating the Guyana Office for Investment for admitting to a mistake in seeking to grant tax concessions for QAII investments in textiles and bio-technology when no provision was made in the laws to facilitate these sectors, Murray said that since the agreement was signed by the Minister of Finance he was the persons to take the blame for what has since transpired.
He said that had this happened in a healthy democracy the result would have been “obvious actions” in keeping with practices of good governance.

In spite of the government’s talk of transparency and accountability, he said that there was no transparency in the QAII deal.
He noted President Bharrat Jagdeo’s warning that if companies in the forestry sector were found breaching the law they would face the consequences and he said this logic should extend to government ministers found breaking the law.
Stating that the PNCR’s policy was to attract investments, he said he does not hold any thing against any investor seeking to get the best deal for his business but as a representative of the people he said he believed it was the duty of the government to be transparent in all its transactions.

Noting that the bill was seeking to cover areas in the QAII investments that are outside of the law, he said that he had a problem with how the issues were going to be resolved since there was no provision for retroactivity. Since there is no provision, he said they would remain outside of the law when the bill was assented to. He believed there was need to restart the process to allow for retroactivity.
The bill he said was also deficient in that it lacked definitions as well. He noted that the bill also gave the minister powers that allowed for indefinite periods for tax holidays, which he objected to and for investments in certain areas to be granted concessions based on negative resolutions.

He said that concessions being granted on negative resolutions were indications of the government not being committed to transparency. He said that the investment should be brought to parliament and approval by affirmative resolution after it was debated on.
Apart from Ramjattan who did not support the bill and who noted the admission of mistakes by the government in agreeing to concessions which were not provided for in the law, TUF MP and Minister of Labour Manzoor Nadir and PPP/C MP Irfan Ally spoke in support of the bill.

The bill will enable the Minister of Finance to remit wholly or in part tax payable by any person or category of persons. This has been seen as a regressive provision as tax legislation has progressively moved away from such ministerial discretion. In 2003, the broad discretion to waive such taxes was reposed in the President and the law was amended to remove this discretion. This new amendment now confers these powers on the Minister of Finance instead.

Clause Two of the bill says that the Income Tax Act would be amended by the insertion of section 105 which says “The Minister may make regulations, subject to negative resolution of the National Assembly, to provide for the remitting wholly or in part of the tax payable by any person or category of persons on such income, in respect of any year of assessment, and in accordance with such conditions as may be specified in the regulations”.

Under Clause Three of the bill, the Income Tax (In Aid of Industry) Act will be altered to grant tax concessions to activities that create new employment in any of the following regions: 1, 7, 8, 9 and 10 and “such other regions as the minister may, by Order, subject to negative resolution of the National Assembly.

The amendment bill says that the activities which can attract concessions are as follows: non-traditional agricultural development and agro-processing, including aquaculture and production of bio-fuels; information and communications technology, not including retail and distribution; petroleum exploration, extraction and refining; tourist facilities; value-added wood processing; textile production; biotechnology; development and manufacturing of new pharmaceutical products, chemical compounds and the processing of raw materials to produce injectables; infrastructural development, including the production of electricity using renewable sources of energy; such other fields as the Minister may, by order subject to negative resolution of the National Assembly specify.
The bill will also enable tax exemptions for a period longer than ten years for “infrastructural development, including the production of electricity using renewable sources of energy”.