Opposition coalition A Partnership for National Unity (APNU) says that should it assume office it will immediately raise the income-tax threshold to $100,000 and reduce the Value-Added Tax (VAT) from 16 per cent to 10 per cent.
Addressing a news conference yesterday, APNU member Lance Carberry said that an APNU-led government will immediately stop the trend of the Jagdeo administration of using “hard-earned Guyanese taxpayer’s monies to reward its corrupt class of parasitic political cronies, through the arbitrary and discriminatory use of ministerial discretion”. Guyana, Carberry charged, now has the highest ration of Central Government revenue to Gross Domestic Product (GDP) which is approaching 40 per cent. “This ratio is very likely greater since the Lotto funds, which the government refuses to pay into the Consolidated Fund, are probably not included, along with dividends and other income from National Industrial & Commercial Investments Ltd (NICIL), from the sale of state lands and other properties,” he said.
“The increasing tax burden is too heavy to bear and the government of national unity will control this escalating situation,” Carberry said explaining that at the same time APNU will not be increasing the fiscal deficit. Suppressed disposable incomes, Carberry said, are having an adverse effect on the work effort while high taxes on business turnover is stifling re-investment and encouraging capital flight.
Outlining its tax reform strategy, APNU said that it will undertake a tax reform strategy which will stem the rise in the overall burden of direct taxation on fixed and non-fixed incomes as well as the indirect taxation on goods and services. “We will lower the tax burden on the low income earners and the other disadvantaged segments of the population,” Carberry added. He said that fiscal incentives (tax holidays, tax free imports, accelerated depreciation allowances, free waivers etc) will be granted on a more rational, sensitive and selective basis by carefully targeting and encouraging innovative and high value-added investments.
Outlining some specific actions that APNU will undertake, Carberry said that “low and fixed income earners need immediate and significant relief” and consequently “APNU will raise the income tax threshold to $100,000.
In relation to VAT, Carberry said that it has proven “to be a windfall since the revenue collected has been much greater than expected. APNU will lower the VAT from the current rate of 16 per cent to 10 per cent.”
When questioned about the feasibility of reducing VAT, he added, “A reduction, therefore, of the VAT would not necessarily result in a reduction of tax income. When the VAT was being contemplated to be introduced, it was agreed that the VAT would be accompanied by comprehensive tax reform.” This, he explained, was in order to provide an incentive for an increase in investment, greater efforts in terms of employment etc.
Meanwhile, according to Carberry, senior citizens (over 60) will enjoy a reduction in the fees charged for obtaining or renewing passports, motor vehicles and drivers’ licences, airport tax exits and such like. APNU, he pledged, would also streamline the process of obtaining permits, licences, registering property and other requirements for doing business here. Carberry promised that there would also be better tax collection efforts, especially in relation to professionals and other non-fixed income members of the self-employed category.
In response to a question on how APNU intends to fund what has been outlined in its economic plan, APNU’s policy and manifesto committee member Carl Greenidge outlined a two-pronged approach which included better spending of revenue and better use of the tax system.
“On the one hand we believe that the government… has been collecting a range of revenues that could be better spent,” Greenidge said. According to him, “a considerable amount of sales which take place under NICIL are done as sweetheart deals and so you have a variety of friends and cronies of the government receiving lands and state assets at prices far below their commercial prices”.
Greenidge, a former PNC finance minister, also said that it would be fairness in the use of the tax system. “We have been using our tax system as a means of helping and facilitating a selected set of companies and individuals and the amounts are not insignificant,” he said. He also pointed to the Contingency Fund which, he said, features questionable advances to ministries.