Chairman of the Private Sector Commission Ron Webster has urged Government to continue with investment in infrastructure and warned that the increases in Property Tax will hurt businesses.
He called for a phased implementation of the new regime announced in this year’s budget and relief measures to cushion the impact.
Delivering his speech as Chairman to the AGM at which he was later re-elected, Webster said that 2012 was a flagship year for many private sector businesses and said that they achieved robust and unprecedented growth.
“Although there was a slowdown during the first quarter of 2013 most private sector businesses have since regained some momentum and it is expected that this will continue and develop through 2013,” said Webster.
He said however that Guyana is rapidly approaching the tipping point, where continued economic growth could be stifled unless the planned capital programmes go forward. “For the growth trend in the economy to continue into the future and with it the success of the private sector there has to be a very significant broadening of the economic base, increases in quality job creation, a reduction in the migration of skills and more cost effective access to and from export markets,” he said.
Webster said that this imperative in turn required a quantum increase in infrastructural investments. “It was my view that the first priority of the Commission was to ensure a stable low risk environment that would attract investment funds and loans with the lowest cost of capital,” he said.
Webster said that last year the new PSC Executive which he helmed took office at a time of turmoil in Guyana when a protest by Lindeners over increased rates for electricity took a tragic turn and three protestors were killed. “The resultant chaos in the mining town prevented access to interior regions and severely disrupted business in the country,” said Webster.
He said that the Commission was successful in brokering a solution to the crisis by providing a platform for dialogue and engaging all civil and political society stakeholders. He said that a number of initiatives were formulated and agreed upon and “we would urge the relevant stakeholders to give of their time and energy to ensuring that these initiatives are brought to fruition.”
“The events that unfolded in Linden also demonstrated our need for us to embark on Security Sector reform to strengthen the recruitment and training of our disciplined services. As such the PSC welcomed the security reform legislation as an appropriate starting point,” Webster said.
He said that at that time the Commission also took a decisive role as a civil society partner in the cessation of the Government-sponsored violation of copyrights and intellectual property. “Although the PSC was successful in convincing the Government of Guyana to change directions there is still so much to be done in this area, and not on an ad hoc basis. This was simply the first step in the right direction, and has to be cemented by National Policy and legislation for the protection of intellectual property rights,” he said.
Webster noted that the role of the PSC as a mediator in the national sphere was also emphasised in 2012 and 2013 as the nation sought to come to terms with, and derive the expected benefits from, the new Parliamentary disposition which was created in the 2011 elections.
“The Commission has since been able to develop closer and more productive relations with all of the Parliamentary parties and Trade Unions as they sought to collaborate for the national interest,” Webster said.
He said that in light of the NIS actuarial report the PSC submitted a detailed report with recommendations addressing concerns raised in the report. “Already we have begun to see increases in contribution rates that will affect our operational costs and that of goods and services. We still await a response from the Ministry of Finance on this issue but would wish to caution that if remedial action is not taken in the near future the situation at the NIS could further spiral out of control,” he said.
He said that in January of this year the PSC made submissions to the Minister of Finance for inclusion in the 2013 budget, including adjustments to PAYE and Property Tax as well as increased spending on infrastructure.
“The PSC was heartened that its proposals were given due consideration and property tax was reduced to 0% for individuals owning property valued less than $40m and, most importantly, Personal Income Tax was reduced to 30% thereby providing a measure of relief for workers and releasing approximately $1.8 billion in additional disposable income into the economy,” he said.
He noted that Government made allocations for the upgrading and expansion of interior roads and airstrips and made a commitment for a new Demerara Crossing, the Linden-Lethem road and the direct road link from Timehri to the East Coast.
“On a note of caution however, although many of the recommendations of the PSC are being gradually actioned, we are nonetheless cognisant of budget issues, which touch and concern the PSC members, namely, the changes to Property Tax calculations and the requirement for revaluations of property to be undertaken, on which the newly structured payments will apply,” he said.
“This will naturally result in an increase of cost to most of our members where assets were acquired many years past, and we urge that companies undertake the exercise sooner rather than later and determine the dollar value implications,” he said. “We have already approached the relevant Ministers on the possibility of phasing these increases, or providing alternative relief measures,” said Webster.