Leader of the Opposition Bharrat Jagdeo has strongly condemned the “scandalous ‘out of court settlement’” between Demerara Distillers Limited (DDL) and Guyana Revenue Authority (GRA) regarding DDL’s tax liabilities, in which “the state lost billions of dollars in revenue.”
In a statement issued yesterday, Jagdeo said, “The settlement sends the wrong message to the business community; that a company can unilaterally decide to stop paying taxes, while other companies comply with the law, take the matter to court and drag it out until a sympathetic government comes to power and settles its debts to the State.”
Noting that the settlement was made public by DDL and not the GRA, he said it has opened the door for other companies “to seek refunds on taxes paid. There have already been reports in the private sector of other major companies consulting lawyers about this possibi-lity. Management officials from a major local alcohol and beverage producing company have made it clear, in the past when I was President, that the company would be seeking a refund depending on the outcome of the DDL matter,” Jagdeo said.
The former president said in his statement that the sum owed by DDL, according to the GRA assessment, was $5.392 billion from 2001 to 2006. “This settlement was only arrived at on March 9, 2016. It means that DDL had use of this money for 15 years,” Jagdeo said. “If one were to calculate interest on this sum, at a rate of 10 per cent per annum, using only the past 10 years, the liability would amount to $10.6 billion. The GRA assessment of $5.392B was based on a formula handed down by the Courts, but yet DDL refused to pay. This settlement also writes off all possible liabilities in respect of Excise Tax up to March 9, 2016; so if the same situation obtains with regard to the Excise Tax, between 2006 and 2016, then the liabilities would run into tens of billions more.”
He said that if the beverage company mentioned above, “were to conservatively use DDL’s case to advance a call for a refund of taxes it paid this could result in the treasury balance being further diminished. Extrapolating, the refund for one company on consumption tax alone could total some $7.6 billion up to 2006, inclusive of interest.”
Jagdeo said that during his meeting with President David Granger he had offered to have the current Attorney-General briefed by his predecessor Anil Nandlall about five major cases involving billions of dollars in taxes lawfully due to the State, including the DDL matter. The offer, he said, which was made because the People’s Progressive Party/Civic (PPP/C) believes we must safeguard the state’s revenue sources and this is not a matter that ought to be contaminated by politics, was rejected.
He called on the government to disclose whether an assessment was done of DDL’s liabilities in respect of Excise Tax for the period 2006 to 2016 and what was the sum of that liability.
According to the statement Jagdeo also wants government to reveal who negotiated the settlement, whether it was legal and if it had been approved by Cabinet or the Board of the GRA. In addition, he said, the principle on which the sum of $1.5 billion was arrived at should be disclosed as well as whether any how many other deals have been concluded or are being negotiated.
Stating that “it is upon the treasury that we depend to fund all the social interventions that touch lives and affect the welfare of thousands of ordinary Guyanese people,” Jagdeo said that the settlement, as well as the possibility of other companies seeking refunds, will cost the state billions in revenue dollars that could have been used in areas that the government said it could not afford to fund.
The statement quoted Jagdeo as saying, “It would have taken $1.7 billion to keep the Wales Sugar Estate functional, thereby safeguarding 2,000 jobs and the welfare of 28,000 residents on the West Bank Demerara. It would have taken $1.6 billion to continue the ‘Because We Care’ cash grant for 177,000 public school children across the country. It would have taken a further $500 million in water and electricity subsidies that would have benefited upwards of 40,000 pensioners. These would have amounted to only $3.8 billion, but were callously not funded.”
He said the potential cost of this single settlement and its possible consequences amount to more money than the state received in loans and grants in any single year. “We call on the international community and in particular the international financial institutions to note this wanton and deliberate haemorrhaging of the national treasury by the coalition government,” he added.
According to the statement, the lack of transparency and the secrecy with which APNU+AFC continues to manage the affairs of the state are increasingly becoming causes for concern and are now being institutionalized.
