I am glad that the Private Sector Commission (PSC) raised its voice on the national budget since as an organization, it has been too docile for too long. They have raised some very creative and insightful recommendations.
I have been thinking over the past few days about what Guyana must have to be able to advance on the road to enhancing our productivity and growth rate, and to start the process of turning the economy around. I came up with ten must have takeaways for the 2017 Budget as follows:
- State of the economy – the people must have more than 5% GDP growth rate in 2017 which will set up rapid economic expansion in 2018 and 2019.
- Infrastructure and housing – we must invest our own funds now in key projects like paving the first 10 miles of the Linden to Kurupukari Road in 2017 and the rapid expansion of new homes construction. At a minimum some $23 billion of the budget should be targeted in these areas in 2017 to drive new infrastructure, new housing and new innovation using taxpayer funds.
- Tax reforms for businesses – The Tax Reform Commission submitted their report to the Minister on January 18, 2016, and he has had enough time to be able to take action to present some reforms of the tax system to drive expansion in the private sector. The main tax for rationalization remains the corporation tax, which is stuck at 30%. It should drop to 25% immediately to stimulate the expansion of the private sector. Guyana’s tax/GDP is the highest in Caricom and this makes it uncompetitive as a place to invest.
- Small businesses with a turnover of less than $10 million in rural and hinterland Guyana should get a tax rebate of $50,000 if they are registered with the GRA, recruit 2 new staff on the NIS records for more than 6 months and file taxes. This will bring more rural and hinterland businesses within the scope of the tax system, expand employment and drive an expansion of the village economy.
- The national minimum wage has to go up to at least $55,000 per month with the tax threshold increasing to $75,000 per month.
- Duties and tax rates on all types of renewable energy will continue to be zero-rated and there should be a tax holiday and a 25% government cash equity contribution for any companies that will invest in renewable energy at the village level (local village utilities). These companies must be 75% private sector run and shares will be sold at a discounted value to consumers of the services in the village that will pay a minimum dividend every year, and cannot be resold to anyone who resides outside the village. This is a deliberate attempt to use the provision of renewable energy for the economic empowerment of the villagers. Any homeowner who signs up to this programme will be eligible to a $20,000 sign-on check from the government. This will allow GPL to focus on the commercial clients. This is not my idea; this is happening in the villages of India today and is a very successful business model for the villagers and the private sector investors.
- All funds in the parallel treasury must be paid into the Consolidated Fund. This deception from the Minister of Finance has gone on for too long. I am calling on the Office of the Auditor General to investigate what the state of the depletion of these funds is outside the Consolidated Fund under the Granger administration.
- Develop a ‘grow more food’ local fund to finance the purchase of seedlings and small tools for all urban residents who want to grow their own food in what little space they have. This will re-establish that movement started by Burnham called the Grow More Food movement.
- Progress the Amaila Falls Hydro Project as a top priority. Only minds which cannot envision a future of a great Guyana will want to destroy what was already invested in this project for petty political reasons. This is not a bad project, but it has to be sanitized financially and to date, no effort was made by Minister Patterson to even move this great idea one inch forward into action. Small minds in big positions are the most dangerous development in Guyana.
- Invest $10 billion in enhancing the nation’s productivity – training in mathematics, vocational training, and on core skills like how to convert an idea into a working business plan. Let us train Guyanese and put them to work. I am really proud of the work of Minister Joseph Harmon on the Public Service Staff College, that is a great start. Great job Minister Harmon.
I am convinced, however, that the team in the Ministry of Finance will not be able to think out of the box and deliver on any of the above in 2017 because they are incrementalists, not visionaries. If we look at how the 2016 economy was managed it will be realized that we have bureaucrats and pen-pushers making the decisions in Guyana rather than transformationalists. They do not know how to enhance their efficiency at national development. So although the Minister may be utterly convinced he is doing the right thing all along in 2016, he has either not learned or else has forgotten how to make major strategic changes. The reality is he is incompetent at strategic change and thus it would be incredibly difficult for him to phantom any of these 10 ideas. He will be doing alternative things that are utterly expensive for the nation, like squandering over $500 million on a parade ground that serves very little useful purpose for the nation.
The real question is not when to become efficient and more deliverable-oriented, according to Professor John Wells from Harvard University, because change has to be done all the time. What change has anyone seen from Minister Jordan’s 2016 versus the 2015 Budget? Very little innovation. The reality is he is incapable of deciphering how to change to drive the economy to achieve the necessary paradigm shift that the nation needs. Because of this, Guyana will continue to under exploit its potential and will continue to under deliver for its people.