Dear Editor,
Thank you for publishing my letter on 18th June 2008. However, I find myself having to write a follow up letter since there were a few arguments that were edited and which I needed to bring to light.
In my first letter I indicated that I am in agreement with the Amendment of 1998 to the Income Tax (In Aid of Industry) Act mainly because it captures the developmental and risk bearing nature of companies. These are the operative words for any huge business seeking to establish anywhere. In order to understand the granting of concessions to any business we should understand the concept of risk bearing which refers to a venture undertaken without regard to possible loss and one which may experience variability of returns on investment.
This sets the tone for the purpose of the Income Tax (In Aid of Industry) Act which is “an Act to encourage the establishment or development of industries in Guyana and to make provision for relief from income tax to persons establishing or developing such industries and for purposes incidental to or connected with any of the foregoing purposes.”
Mr. Christopher Ram and others should have realised that the concept of opportunity cost plays into this business decision. For the many that are not familiar with this basic economic concept, it is the next best alternative foregone in light of an accepted solution/decision or to academically phrase it, it is the economic cost of using a resource for a specific activity which is equal to the income foregone by not using it for an alternative activity.
I urge Mr. Ram and others to question what was the opportunity cost to the Sanata Complex (the next alternative) had QAII not leased the property. The answer is further ruins and increased maintenance cost for a property with potentials but unable to generate revenue.
The columnist and others may wish for the public to conclude that QAII’s concessions are not in keeping with the law but yet there is nothing illegitimate about the concessions. As a man knowledgeable in various topics he should know that in every country there are always exceptional circumstances that warrant a bend of legislation until proper rectification is in place provided that 3 criteria are met namely: (1) the situation must result in a significantly better outcome than what the legislation and rule following may confer, (2) the action should not undermine rule-following in general or present it as the accepted norm and (3) the deviation, if applicable and necessary must be the only means of achieving the better outcome.
This would be de facto until the rule or legislation is amended accordingly to reflect the good of all which is the main principle behind legislation and rules. So the granting of concessions to QAII was not illegitimate or nepotism for the government has shown commitment to making the necessary changes to the laws.
Therefore, the new investor, QAII, should not be harried because government has conferred various concessions to it. It earned those concessions.
Yours faithfully,
(Name and address supplied)
