Leader of the Opposition Bharrat Jagdeo yesterday blasted government’s proposed $230B national budget, saying that it offered negligible tax relief for the average person and that the planned banning of used tyres and other measures will hit the poor.
“There is a huge disconnect between this budget…and what should be…soon people would start feeling it in their pockets,” Jagdeo, a former President, lamented at a press conference he held just after the presentation of the budget by Finance Minister Winston Jordan.
A former Finance Minister himself, Jagdeo criticised proposed measures by Jordan, zooming in especially on the planned ban on used tyres and the restriction on the importation of used and reconditioned vehicles more than 8 years old.
This, he said, was because those measures will ultimately force an increase in the cost of public local travel and decline in auto ownership of Guyana’s middle income earners. “How many persons can afford new tyres? Most of the tyres that are used in our system are used tyres. Now from a safety perspective you need to look at quality regulations of them but when you ban them completely you are transferring money from the people who are importing used tyres and also taking money out of the pocket of those ordinary people who could only afford used tyres for their vehicle…If you have to buy new tyres what do you expect? The cost of transportation will go up,” he reasoned.
Jordan yesterday also announced the removal of the excise tax on motor vehicles under four years old under 1500cc. He pointed out that these vehicles currently attract the excise tax at the rate of 30% and an effective tax rate of 118.7%. With this removal, the effective tax rate will be reduced to 68.2%.
As it pertains to the reduction of the excise tax from 50% to 10% on motor vehicles under four years old, between 1500cc and under 2000cc, Jordan said the result will see an effective tax rate of 152.3% being reduced to 85%.
However, Jagdeo argued that while the percentages look impressive, the actual cost to purchase a new vehicle will be taxing on the poor and serve to only benefit a few auto dealers. He believes that the old system should have been revised but still make provision for the purchase for some reconditioned vehicles. “At least a section of our population that are lower middle income could still afford something to drive now they will not be able to with the banning,” he asserted.
While he was pleased that consumers will be getting an ease at the pumps with the price they pay for fuel, given the reduction in petrol prices, he believes that it should not have been a budgetary measure given the unpredictable and currently fluctuating global oil prices.
‘Paltry’
The former President also bemoaned the “paltry $5000 increase” in the income tax threshold, from $50,000 to $55,000 per month. “We have had an increase in the threshold that will not make a big difference in people’s lives. It is a negligible increase, just negligible, working out to just about $1500 in persons paying taxes pockets. What can that do?” he questioned.
“We have seen no increases for wages in salaries and an increase in the threshold that will not make a big difference in people’s lives so this budget has absolutely nothing for poor people and this is where we would have thought government would look to transfer more for the most vulnerable groups in this country…The ‘Good Life’ can’t start with this budget. People would have retrogression in their lives,” he said making reference to the APNU+AFC’s party slogan ‘A good life for all Guyanese’.
During its 23-year reign up to 2015, PPP/C administrations did not always raise the income tax threshold. Jordan also said yesterday that wage increases for public servants have to await collective bargaining.
And on government’s $1,200 increase in the old age pension, the Opposition Leader contended that the move strayed far away from his government’s social service provisions for the country’s elderly and will be “heavy felt” by seniors. “We (the PPP) sought to expand benefits to people in a real way…the pensioners lost in a great way last year. The increase cannot compensate them for their loss of the water or electricity subsidy,” he charged.
Under the PPP/C pensioners were given $20,000 in electricity subsidy while $30,000 was given towards their annual water bills.
According to the Opposition Leader, there were few provisions for Guyana’s industrial sectors. “There is nothing for the rice industry and very little for any other sector, minimal… there was nothing to assist the mining sector, not a single budgetary measure. So nothing for mining… less than what the COI (Commission of Inquiry into GuySuCo) proposed for sugar, nothing for the rice industry, nothing for construction, nothing for manufacturing, very little for tourism. We have not seen any measure to stimulate production,” he posited.
Turning to government’s tightening up on tax defaulters by requiring persons to obtain compliance from the Guyana Revenue Authority, Jagdeo said that those living especially in the far flung locations will find it time consuming. “It’s a lazy way to go after tax evaders and put the burden on everyone, mostly poor people. You pass the burden to everyone rather than target those because there are people you can target for audits etcetera that are big tax evaders,” he added.
He also pleaded with the populace to analyse government’s proposal for the purchasing of solar energy from a private investor as he believes there was much revenue to lose for the country.
“There is one thing I would wish every citizen to listen to very carefully…it’s what they plan to do in the electricity sector. There is a $50M project that they currently have, negotiating a power purchase agreement …This project is being developed by a supporter of the government and they plan to buy half of the price of what GPL is generating at… 28 cents. That figure is outrageously wrong… I do not believe it is more than 14-15 cents, yet the minister said 28 cents. This I believe is to buy power from this individual which will stick this country huge costs,” Jagdeo charged.
The former president believes that the David Granger administration would have produced a citizens-approved 2016 budget if they had consulted with his party and financial decisions formed for the year had been mutually agreed upon. “We would have apprised them on where we were taking the country…provided stimulus for the economy…we had identified seven or 8 new growth poles for Guyana. We sought to expand benefits to people in a real way,” Jagdeo said.
The government has said that it had attempted to have dialogue with the PPP on the budget but that it had not borne fruit.
