President’s much vaunted tax review in limbo

Three months later, the Tax Review Committee that President Donald Ramotar established is still to meet and start its work of revamping the country’s tax system and reports are rife that one of the persons on it might have expressed reservations in light of the many criticisms of it.

Stabroek News has learnt that up to one month ago, the terms of reference had not been drawn up as yet for the commencement of the committee’s work. However, efforts by this newspaper to speak to members of the Committee were unsuccessful.

Further, the government had in February undertaken to facilitate a request by the Alliance For Change (AFC) and A Partnership for National Unity (APNU) to meet with and make presentations to the Tax Review Committee but this never happened.

Opposition leaders had raised concerns that the President put together the committee without consulting them.

President Ramotar had in December identified chartered accountant, Ronald Alli, economist Dr Cyril Solomon and businessman Clifford Reis to constitute the panel to review the taxation system.

Speaking to Stabroek News this week, Gerhard Ramsaroop of the AFC said that that party’s concerns regarding taxation were taken off the agenda of the Inter-parliamentary party dialogue. He said that the reason Government gave for this was that they would be considered as part of the talks of the tax review committee.

“They took our issues off the agenda with the understanding that it will be addressed at the level of the tax review committee,” he said.

He said that the considerations of that committee were to have been completed by the end of March. “In January the AFC had submitted its agenda. We never met as President Ramotar had promised,” he said.

According to Ramsaroop, the AFC was concerned about the reduction in VAT and old age pensions. The AFC and APNU expressed their interest in meeting with and presenting their views to the Tax Review Committee that the President appointed to review the entire taxation system. “There was no objection to this request and efforts would be made to facilitate this,” the statement said.

In early February Minister of Finance Dr. Ashni Singh had said that it was “early days yet” in the work of the Tax Review Committee. He said also that he was not expecting its work to be completed before the budget. The budget was presented two Fridays ago and comes up for debate on Tuesday.

Economist Dr Clive Thomas in a recent column in the Sunday Stabroek pointed out that such reforms are so deep-seated as to require a far different approach for their resolution than is possible through a Tax Reform Committee made up of persons who are seen as having good working relations with the PPP/C administration over the years, no matter how skilled, proficient and experienced they are.

Dr Thomas described the current tax system as fractured, far too costly, burdensome and inefficient. He called it dysfunctional in relation to promoting economic efficiency, growth, development and welfare, because the deep-seated problems are as much political in nature as they are technical or economic.

He said that the way to overcoming this is through the establishment of a broad-based National Commission on Tax Reform.

According to a draft of the Review of the Tax System, prepared under the GTCP/IP in 2009, Guyana has high and highly differentiated tax rates on business income, ranging between a 45 percent rate on commercial companies, 35 percent on non-commercial companies and 33.3 percent on unincorporated businesses. It said too that there appears to be “no compelling economic or equity reasons” for corporate tax rate differences between commercial and non-commercial companies.


Around the Web