The Private Sector Commis-sion (PSC) yesterday praised government’s move to reduce corporate taxes and raise the personal income tax threshold, saying it has vindicated the body’s efforts to work with the government on implementing the National Competitiveness Strategy (NCS).
In a statement issued yesterday, the PSC said the raising of the threshold to $40,000 will bring “unprecedented relief” to some 40,000 taxpayers and more disposable income in the economy. The previous threshold was $35,000.
“The reduction of the corporate taxes is a leap of faith in the private sector by the government of Guyana and the Private Sector Commission now feels vindicated in its collaborative efforts with government to bring various matters in the National Competitive Strategy to a head,” the statement read.
For commercial entities, with the exception of the telephone companies, the rate has dropped from 45% to 40% and from 35% to 30% for non-commercial companies.
The PSC added that reduced corporate taxes means that the private sector can now become more competitive and reinvest in their businesses and have the opportunity to “compete with the best in the Caribbean.”
“We envisage that in the coming year the emerged private sector will enjoy the benefits of an emerged middle class in Guyana that will drive spending, drive consumption and drive the creation of new types of equity and collateral for further lending by banks and other institutions,” the PSC continued.
Meanwhile, at a news briefing also held yesterday, it was noted that tax reform was a precondition of the NCS and PSC Execu- tive Director Roubinder Rambarran said they would be looking to work with the government on continuing the process since attention to rates alone was not reform.
“It has to do with administration and planning also, not only with figures and our recommendation is looking at that, on how we can enhance the administration of tax. Tax planning is an important aspect and … once you get the administration right then you will look at rates; rates are just a reactive approach in terms of dealing with taxes,” he said.
As to the PSC’s priorities, Rambarran said export promotion, trade facilitation and standards were critical to the growth of the private sector. “Most of the domestic market is saturated; with the reduction of taxation and increasing threshold of PAYE you might find people will have more disposable income and it might stimulate demand a little in the domestic market but strictly any increase in capacity will have to be targeted [overseas].”
According to Rambarran, those three areas will help create the kind of environment to promote exports.
