“It is too early for the Commission to offer a comprehensive analysis on the Budget, but we can legitimately ask whether this Government’s Budget is committed, in real terms to the vision it speaks to `of improving the quality of life of its people’”, a statement from the Private Sector Commission (PSC) yesterday declared on the 2018 budget.
Further, it added, “We recognize that the measures in the current Budget will have a positive impact on local businesses, however, we believe that this Budget is distinctly absent those measures necessary to sufficiently reverse the negative impact of the measures in the 2017 Budget.”
The PSC had promised that it would issue the statement yesterday following post budget consultations it held with other private sector bodies, including the Georgetown Chamber of Commerce and Industry, the Guyana Manufacturing and Services Association (GM&SA) and respective, Berbice, Lethem and Essequibo chambers of industries and others.
Basing all arguments and positions on Minister of Finance, Winston Jordan’s Budget 2018 objective of fostering higher growth for more and better jobs while investing in skills development, the PSC said that it would be looking to see if the budget addressed those fundamentals.
However, it listed fundamentals of its own that it feels that the Budget should be addressing such as, the reallocation of resources, the reduction of inequality in income and wealth; ensuring economic stability; the management of public enterprises and reduction of regional disparities.
It pointed to aspects of the budget that were deserving of accolades but said these were diminished by other counterproductive proposals.
It noted the fallout from the 2017 budget last year.
“For instance: the change of the tax policy from zero rating to exempt and standard rated goods and services, the VAT on electricity, the VAT on agricultural and mining machinery and inputs. We are disappointed that there is no clear policy enunciated for addressing a projection on the level of corporate taxation based on which the business community can reasonably plan future investment, a recommendation that we had urged the Minister to embrace. We compliment the Minister on the monies allocated to education. But, we urge the Minister to put in place systems to ensure an adequate return on this investment and that these monies result in the acceleration of human development,” it stated.
“While the Budget recognizes that the challenges faced by the public health sector are many and, by the Minister’s own admission, point to the shortage of drugs and problems of procurement, we have searched for a policy to address the shortcomings,” it added.
The Georgetown Chamber of Commerce and Industry (GCCI) in a separate statement also credited the Minister of Finance for taking consideration of their proposals for this budget and thanked and commended Jordan for “what it sees as steps in the right direction” in his listening to them.
However, GCCI expressed its regret at what it termed “the shortcomings” of the Budget to provide clear direction on an incentive regime for the private sector, apart from the Investment Act and Aid of Industry Act. “In this regard, the Chamber is displeased that the fiscal policy initiatives detailed in the budget did not provide stimulus to some main sectors of the economy, and particularly that there has been no reduction to the corporate income taxation rate, personal income tax rate or a raising of the tax threshold,” it said.
Additionally, the GCCI said that it too was hopeful that a clear plan would have been articulated in the way of job creating investments and/or, facilitation of job-creating investments. Also worrisome, is the fact that there was no elaboration of a strategy to absorb workers who will be displaced by government’s attempts at GuySuCo’s divestment/ diversification.
“The government’s efforts to address the economic and social malaise stemming from this divestment were reduced to 3 sentences in a paragraph and is a great cause for concern given the industry’s importance and material impact on the economic livelihood of many communities,” GCCI stated.
And with Oil and Gas production nearing, the PSC in its statement said it had expected that the budget would have “devoted a great deal more than seven paragraphs to the preparation of our country for an event which will hugely transform the future of the nation.”
“It is obvious that our Government should already be engaging the services of industry experts to negotiate and engage, as equals, with the multinationals such as Exxon. The budget is, however, peculiarly silent on this need to build our capacity,” it further stated.
Cheap and reliable energy and having a plan to achieve this was also focused on and the PSC expressed disappointment that budget 2018, seemed to concertize for them that the Amaila Hydropower Project has been canned by the APNU+AFC government.
“We note that, with regard to energy, the Budget, consistent with Government’s long expressed position, has, all but abandoned the Amalia Falls Hydropower Project, advancing a mix of energy projects, but offers no clear indication of the cost of investment in the energy mix and the future cost of energy per kilowatt hour,” the statement noted.
The GCCI’s statement also lamented not hearing about more plans for the impending oil and gas sector.
“It was anticipated by the Chamber that there would have been some elaboration regarding the Oil and Gas Sector and the expected role and recent developments of the Sovereign Wealth Fund (SWF), especially when considering the importance of the SWF to the creation and promotion of a resilient economy,” their statement read.
“This becomes more worrying as Guyana moves closer to the production of Oil in 2020 and remains, by the Minister’s own admission, vulnerable to external shocks and fluctuations in international commodity prices. When taking this vulnerability into consideration, the Chamber expected some emphasis to be placed on the promotion of the agriculture sector, particularly through a suitable incentive regime,” it added.
For the GM&SA, it had hoped that proposed measures to address critical areas such as taxation, access to finance, and energy would have been
considered since it believe that “These could have provided a much-needed catalyst for the manufacturing sector to achieve the projected 2.4 percent growth.”
‘Listened and adjusted’
But for veteran private sector executive Ramesh Dookhoo, who has witnessed decades of budget presentations under different governments, the Minister of Finance and by extension his government should be lauded for a budget that reflected many recommendations of its people.
“The things that really struck out at me is the fact that the minister really listened to the people and to us in the private sector. He made some changes and he walked back on some taxes and so on. I have never seen a govnerment here in Guyana do that. The minister listened to the miners, forestry producers, parents on VAT on education and so on and he adjusted.
“The GM&SA came up with tangible documentation ….which they did with the forest and the result was good. I think the thing the minister used was fact-based analysis and he realized that he can’t go about making changes I think it is a good sign and I think he is putting meaning to the discussions he is having with the PSC and one can only hope that going into the future this would be the precedence. It bodes well for the consultative process and I hope to see a lot of that into the future. This is a huge positive,” he added.
Dookhoo, who said that he was still analyzing the Budget, lavished praise on Jordan saying that persons in the private sector would understand the frustration over the years with trying to get travel allowance taxes fixed.
“The issue of the tax on travel allowance has been around for years and no one could find any documentation that there should be a tax only for private sector employees. That right there was a huge step in the right direction again,” he stressed.
And while some in the business community will complain about the 40% tariff on the import of pinewood lumber, he feels it should be seen as the catalyst for local lumber dealers to raise their standards.
“I am a great supporter of value-added and I don’t pay lip service to it. Businesses can invest in this area and raise their standards. If they complain about electricity? They can buy a generator and start …you can’t put negatives before you even try. There is scope for growth,” he said.