“Immensely ominous for the future of country,” were the words used by Opposition Leader Bharrat Jagdeo describe the 2017 Budget presented by Finance Minister Winston Jordan to the National Assembly yesterday.
Calling Jordan’s presentation “eventful,” Jagdeo at a press conference immediately after the reading of the budget, said that initially he thought the budget was “immensely resourceful,” but when the Minister announced the measures he found it ominous.
According to him, during Jordan’s presentation he “meandered from cliché to cliché” and did some rehash of old information. And as for the project ideas, according to the former president, they were not thought out clearly.
“For example, the proposal to start the road from Georgetown to Lethem going to phase one when no feasibility… or even the pre-feasibility studies have been done at this point in time; given the traffic between Brazil and Guyana, it is unsustainable to spend US$400 million on a road of that nature which is $80 billion in the long run,” Jagdeo said.
As to the tax measures, Jagdeo said their implications will not be recognized immediately. He touched on the Government fulfilling its campaign promise to reduce Value Added Tax by 2%, but noted on the other hand that the tax will now be added to electricity and water bills once they go over certain amounts. He also pointed out that a number of items which were exempted, because, according to him, they affected poor people, will now be taxed.
“A rich guy importing something fancy now gets his VAT reduced from 16% to 14% but poor people and mothers, single parents who have to find milk for their babies now have to pay VAT on the milk,” Jagdeo pointed out.
He said these new measures will “wreak-havoc” on large numbers of people and questioned how they could be helpful to citizens.
He noted that there is a reduction in one element of Corporation Tax for manufacturing, but manufacturers must keep two sets of books because they would still have to pay VAT on the commercial side at 40%. “No benefit to anyone,” he stated adding that there is an increase in departure tax, premium tax, capital gains tax, passport fees and even in the fees for the transfer of vehicles from one person to another.
Further, government budget agencies will now have to start paying VAT, “so what he has effectively done is to cut the budgets of all of the ministries…”
He believes that the budget is not supportive of growth and according to him what stood out in the earlier part was the Minister’s announcement that the government will issue local bonds to finance the fiscal deficit. “It seems to be an innocuous statement and on their side they cheered about it, but behind this statement is a fundamental economic philosophy and a departure from what we have been doing,” Jagdeo said.
By issuing the bonds, according to Jagdeo, the government would be going into local capital to raise funds to finance the budget and in the process compete with the private sector for funds because they would be both be seeking funds from the same capital market. He said this will see interest rates rising and eventually growth in the future would be choked off.
Persons would also be discouraged from investing because the state would be sucking most of liquidity from the system.
“I see this as a fundamental issue that will destroy any possibility of recovery and long-term growth,” Jagdeo said.
He also pointed out that after over three hours of presentation there was no set of activities announced that will bring more jobs to the ordinary man or address their concerns.
“In all my lifetime this is probably the worst budget I have ever seen; the budget that brought in the most taxes in the history of our country and in a fundamental way has destroyed any possibility of any recovery in our economy,” Jagdeo said.
As regards the funds established for training, Jagdeo is of the opinion that they are “slush funds” for political activities.
“These training budgets are used for political partisan activities like how they used $50 million for local government elections just to travel to the interior from the Social Cohesion Ministry,” Jagdeo said.
He questioned what miners, rice farmers and sugar workers were getting out of the budget and answered himself, “Nothing,” adding that he was “stunned” that Jordan only mentioned workers in passing.
And according to Jagdeo, the Guyana Revenue Authority will soon ominously have the authority to go into persons’ bank accounts and garnish monies they assess owed.
“This is unbelievable. I never thought I would witness this here today. I thought we were coming to discuss a pro-growth budget that will create greater jobs for people and income and bring welfare,” the opposition leader said.