Tax reform at ‘very top’ of private sector 2009 agenda

PSC also anticipating early end to telecoms liberalization talks
The prevailing tax regime in Guyana continues to be a major disincentive to the continued growth of the private sector and public/private sector engagements on tax reform will be at the very top of the PSC’s agenda in 2009 according to Commission Chairman Captain Gerry Gouveia.

“Tax reform is unquestionably a critical area of concern for the private sector, whether it be income tax, corporation tax or Value Added Tax. We are aware that the government has expressed a commitment to tax reform but we believe that the process is taking too long,” Gouveia told Stabroek Business in a recent end-of-year reflection on business and the economy.

Chairman Captain Gerry Gouveia
Chairman Captain Gerry Gouveia

The PSC Chairman disclosed that the Commission is currently “in the advanced stages of conducting interviews” that will lead to the recruitment of a tax consultant early next year. “We are taking the issue of tax reform very seriously and what we are seeking to do is to recruit an expert to work with us in the private sector to help refine and articulate our thoughts in what we anticipate will be comprehensive discourses with government which, we hope, will lead to major tax reforms,” Gouveia told Stabroek Business.

According to Gouveia government was already in receipt of a green paper on tax reform prepared by international tax consultants. “We expect that the next stage of the process towards tax reform will be a consultative exercise involving the public and private sectors and civil society.

The private sector lobby for a comprehensive regime of tax reforms has intensified since government’s introduction of the Value Added and Excise Taxes in January 2007 and Gouveia said that the private sector was of the view that reforms could be “a critical and revolutionary step” towards significant growth and expansion of the local private sector. “We believe that high income tax is a deterrent to business development, whether it is personal income tax, VAT, corporate taxes, duties on vehicles or property taxes and our pursuit of tax reform is aimed at stimulating the growth of the business sector and, by extension, the growth of the country’s economy.

Gouveia said that the private sector understood some of the critical issues associated with tax reform and was prepared to take ‘a holistic view” in its discourses with government. “We understand that what tax reform will mean is that government revenues will be diminished, at least in the short term and we expect that that will be a concern given the obligations which the government has to meet.  We believe, however, that we must seek to persuade the government that in the longer term, tax reform will serve as a stimulus for more economic growth and that the loss of revenue will in fact be short term,” Gouveia said.

Meanwhile, the PSC Chairman disclosed that the private sector was also looking forward to “further movement” on the issue of the liberalization of the telecommunications sector in the new year. “We recognize the importance of affordable and reliable telecommunication to the strengthening of the necessary infrastructure for the development of business in Guyana and while the private sector is taking no sides in the liberalization talks we expect that the eventual outcome of the process will encourage the investors in the sector to continue to have confidence in the business environment here. Of course, however, our primary concern is with the creation of a service regime that will benefit the people who depend on telecommunications facilities, whether it be in the private sector or at the level of private users.

Gouveia disclosed that the PSC had had “discourses” with both service providers and that its concern was with a “fair negotiating process” towards a resolution that respected the sanctity of legal contracts while recognizing the importance of creating a level playing field in a liberalized  telecommunications sector.

Meanwhile Gouveia told Stabroek Business that the PSC has recently set up an agricultural committee in order to enable more direct involvement in the national agricultural drive in response to the regional initiative to reduce its food import bill. “We are in the process of bringing the large operators in the private sector within the embrace of the Private Sector Commission so that we could come to a better understanding of the challenges facing the sector. Once that is done we will be in a better position to engage government on how the agricultural sector can best respond to the challenge of maximizing local and regional food production. “I have spoken with the Minister of Agriculture and he is keen to work with our agricultural sub-committee as a means of helping to develop responses to the challenges facing the agricultural sector.

And according to Gouveia the PSC was supportive of the call being made by Guyana for the issuance of carbon credits to countries in exchange for the preservation of forests. “It is clear that issues of climate change and deforestation can no longer be treated purely as environmental matters and that we in the private sector cannot ignore the implications of climate change for business development and the growth of the economy.

Gouveia said that despite “some outstanding issues” on the public/private sector agenda he was of the view that the business community was ending the year “on a positive note.” He said that while businesses continued to be apprehensive about the global economic crisis and its likely impact on Guyana, a few “bright sparks” had appeared recently. “One of the most obvious of these is the fact that after a year in which oil prices reached a record high we have benefited from two significant reductions in fuel prices and those have benefited both ordinary consumers and the business community,”

And according to Gouveia the private sector also welcomed the fact that the country was ending the year in an atmosphere of relative political calm and one in which some of country’s serious crime challenges had been confronted and overcome. “We live in a society where the reduced political rancor and crime that threatens both the civil population and the business community cannot be taken for granted. In this regard we have had for more difficult Christmases and we owe a debt of gratitude to our security forces and, perhaps, even to our political parties.”