The government yesterday failed to win opposition support for amendments to the Customs Act, despite its arguments that the failure to legislate the changes would expose the country to litigation and sanctions.
APNU and the AFC, which urged the government to postpone the consideration of the Customs (Amendments) Bill 2013 in order to conclude promised consultations with the private sector, eventually resorted to using their combined one-seat majority in the National Assembly to vote it down, effectively killing it.
The bill, which was read for the first time on January 10, sought to lower the rate of the Environmental Tax charged on beverage containers while widening the range of bottles, cans and other receptacles that are subject to the tax. Had the amendment passed, it would have removed cardboard boxes from the list of taxable items under the Act. And while it proposed to lower the tax levied on some items imported, it would have also levied a new tax on local manufactures that are exempted under the current legislation.
Speaker after speaker on the government side emphasised the importance of the passage of the bill in bringing the country in conformity with its many regional and international obligations, while also potentially protecting it from losing money in a case set to be heard next month by the Caribbean Court of Justice (CCJ). However, both APNU and the AFC argued that it is the government that has placed the country in jeopardy by passing laws that do not conform to international standards. Opposition speakers also charged that although the current PPP/C administration no longer has the majority in parliament, it still wants to rush through bills without holding proper consultations.
APNU’s Shadow Finance Minister Carl Greenidge pointed out that suddenly the opposition is being called upon to be patriotic and pass the legislation without a murmur to show that it has the interest of the country at heart. But he said a more reasonable requirement would have been for the government to consult with the opposition before taking the legislation to the House.
As Minister in the Ministry of Finance Juan Edghill was called upon to read the bill a second time—in the absence of Finance Minister Dr Ashni Singh—Greenidge urged that the matter be deferred for consideration since there was an understanding that they needed to arrive at a position prior to its readiness for presentation to the House.
Although Edghill pointed out that it was the opposition who had asked for the bill to be deferred for consultation in January but up to yesterday “no substantive objection to this bill was made,” Greenidge noted that while it was a member of the opposition that sought the approval of the House for the deferral, this was done at the request of Singh. “And it arose that the Minister of Finance had not concluded his deliberations with the private sector, that was an obligation that he had and he failed to do it,” he added.
He said that both then and now the government faces court actions “arising from the lawlessness that… has always characterised the manner in which this government operates.”
According to Greenidge, APNU had indicated that it wanted to be assured that there is time for the private sector to consider the matter and to be satisfied that it was not going to be disadvantaged. He said Dr Singh assured that he would allow for the time but he wanted them to bear in mind the CCJ hearings.
“But the point is they wanted an agreement at the time and that was premised on the report that the private sector would have commissioned—a report that was to address the more efficacious means of dealing with [this issue],” he said.
He added that the private sector’s intention was to have someone look at the proposal with the view to come up with alternative means of treating with the matter.
Greenidge told Edghill to impress on Dr Singh that notwithstanding the hearing next month at the CCJ, they should reflect upon the structure of the tax itself so that it could properly be called “environmental.”
However, Edghill argued that the issue is one that should not attract controversy, while recalling that in February of 1995 the country introduced an environmental tax on imported beverages in specified containers which were deemed to pose a negative impact on the environment because of their non-biodegradable nature.
However, the taxation has been determined by Caricom’s Council for Trade and Economic Development to be discriminatory on the grounds that it applied to imports only and not on domestically-produced goods. The amendments, according to the minister, are to bring the country in line and honour the Treaty of Chaguaramas.
“It is intended to bring Guyana in compliance with its obligation under the Treaty of Chaguaramas and the World Trade Environment Convention both of which Guyana is a party,” Edghill stated.
He argued that the bill should attract the support of the entire House as it brings benefit to the entire country.
The amendments sought to apply a tax on every unit of non-returnable containers for both imported and locally-manufactured alcoholic beverages and also to reduce the rate of the tax from $10 to $5, in an effort to allow the tax to remain revenue natural.
Edghill said while it would mean an additional tax of $5 for the local manufacturers of alcoholic beverages, it will encourage them to retrieve and re-export the goods which will see the tax no longer being applicable.
He acknowledged that there are local companies who have concerns about the amendment but added that consultations were held and the country can no longer continue to delay.
Greenidge stated that Guyana has no obligations in Caricom to implement this “so-called environmental tax” as it is not an environmental tax. He said that Caricom became involved because in implementing customs legislation the government “discriminated against foreigners who were exporting to Guyana [and] that is the source of the problem….”
According to Greenidge, the present bill is a bid by the administration to correct a lawless act and he added that it is not the first time the government has passed legislation knowing fully-well that it was not in conformity with the Caricom treaty.
He said that a tax that is simply levied on a particular category of goods cannot be called an environmental tax unless it has some sort of discriminatory mechanism that penalises the imports that are less degradable than those that are easily bio-degradable. However, Minister of Foreign Affairs Carolyn Rodrigues-Birkett maintained that the bill would have brought Guyana in conformity with a number of its regional and international operations. She pointed out that the revised treaty of Chaguaramas makes it clear that member states are prevented from levying tax against imported goods unless the same is levied on domestic goods.
“So there is an obligation on the part of Guyana to not discriminate. So, it is not true to say we don’t have an obligation to Caricom,” she noted. She said that in 2005, Caricom had looked at the taxation applied in nine member states and it found that six of those countries, including Guyana, were applying the tax in a discriminatory manner. Since that time, member states sought to address the matter and as of last year only two countries were not compliant—Guyana and St Lucia. As it stands now, Guyana is the only country not in compliant as St Lucia made the change in October of last year.
Rodrigues-Birkett argued that the country could not delay the passage of the amendment bill because of the urgency to become compliant with the obligations of the treaty. And apart from the regional obligations, she pointed out that Guyana is a signatory to the Economic Partnership Agreement (EPA) with the European Union which also makes it clear that imported goods should not be taxed in excess of what is applied to locally-produced goods. The issue was also raised at the World Trade Organisation (WTO). The minister said that she is aware of the concerns of local manufactures who have argued that they face unfair competition from importers in whose home countries cost of production is much lower than in Guyana. But she said the matter would have been debated in all of the member states who had the same concern, while adding that Guyana cannot address the concerns by being non-compliant with its obligations as the country also exports.
The minister said there is need to find mechanisms that would as far as possible cushion the effect of the new amendment and the government is open to this.
In arguing in support of a deferral, AFC leader Khemraj Ramjattan said that the government does not appreciate the necessity for consulting for all to understand the issues. He pointed out that it was the government who decided to charge the importers $10 and now faced with the charges of discrimination it seeks to charge $5 instead and let the local manufactures pay the other $5. He said that is not how he views an investment climate, while pointing out that if there is a certain percentage that is needed for the environment, it should be dropped to that across the board but it has to be low enough to make accommodation for local business persons.
Ramjattan said he spoke to a number of businesspersons and they are not in support of the bill. He also pointed out that from the budget estimates, it was revealed that the government collects $1B in environmental tax every year but yet Georgetown is garbage-infested. “The whole city stinks. We have to start thinking more holistically as to what we are doing with this tax we are collecting. That is also an important question,” Ramjattan said, while adding that the business persons the party spoke to have also asked how the money is spent.
APNU MP Joseph Harmon also raised the issue of the funds from the tax and reading from the Hansard he quoted then Minister of Finance Asgar Ally telling the House 18 years ago that a special account would have been set up to place the money. Harmon asked where the account is and what has happened to the money that would have been collected since.
Ramjattan said that the government wanted support for the bill with the promise of talks later but he was unconvinced, saying there would be no talks but rather laughs. He said the AFC will not be pressured by the arguments of sanctions and he called for the entire issue to be taken to the public to let the ordinary man know what the bill means to them. He said that the business persons have already indicated that once the new tax is levied, it will be the consumer that who will have to pay more.
The Bill had stated that the Environmental Tax will be levied on every unit of metal, plastic or glass container of any alcoholic or non-alcoholic beverage imported into the country and every unit of resin, metal, plastic or glass container to be used in the manufacture in Guyana of any alcoholic or non-alcoholic beverage. The tax was expected paid to the Guyana Revenue Authority at the same time as duties on the items.