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FM
Former Member

Budget must stimulate economy

Budget 2017 will be presented today and, by the consensus of most stakeholders, its main challenge will be to jump start our moribund economy. What is immediately needed is a directed intervention to stimulate the economy via all the monetary and fiscal tools at the disposal of modern governments and deployed routinely by the US and other “free enterprise economies”.
The Private Sector Commission (PSC) proposed some of these when it called for a permanent reduction of the corporate and personal income tax rate, over 10 years, to 20 per cent and an increase in the income tax threshold to $100,000 per month. These measures would immediately make income available to businesses and individuals, which experience in other jurisdictions has shown will generally be ploughed back into investment and purchases to give a fillip to other businesses.
The PSC also called for Government intervention to give relief to the massive loans that are outstanding in the rice industry occasioned by the depressed prices for rice and paddy subsequent to the Government’s refusal to engage the Government of Venezuela for an extension of the lucrative rice-for-oil deal under the PetroCaribe Initiative. The taxes on inputs in the rice industry – including diesel fuel – in our estimation, should also be lowered or the industry will certainly shrink massively in the next crop.
The other interventionary measure is to catalyse a stratum of entrepreneurs and businessmen who will be willing to take the necessary risks to establish service or production companies that can compete and export in the global economy. Towards this end, the PSC also called for the Government to reduce income taxes for companies that create new employment in all value-added sectors. More pointedly, it has reminded the Government that infrastructural projects are critical in stimulating the modern economy and, in fact, Donald Trump in the US promised that this measure will be central to his economic revival of his country’s economy. In Guyana, the Amaila Falls Hydroelectric Project comes to mind as one that the Government has sidelined even though it is central to Guyana’s ultimate development hopes in the short term.
In all of the industrialisation of firstly England, then the USA, followed by Japan, the Far Eastern Tigers, China and now India, all of their Governments facilitated the growth of businesses because this ultimately benefited the entire populace and economy. But in Guyana, there is a very unhealthy development unfolding in reference to the oft-announced national goal of higher growth rates. The Government has continued with its old Opposition tactic to insidiously undermine the premise underlying every successful business entity and indeed every successful economy – the imperative to generate profits.
Even though the Government has committed since 1989 to the proposition that businesses shall be “the engine of growth”, the new Administration is proceeding as if the “engine” does not need rails to pull the economy forward. “Successful businesses” mean that those businesses will have to generate profits and this means that the owners, whether individuals or shareholders, will become wealthier. Businesses should not have to apologise for this.
Secondly, we have pointed out the nexus between governments and successful world-class companies in the modern high-flying, export-oriented economies. Even in the US, the role of Wall Street is acknowledged. This is inevitable: how can the engine and driver not be in communication and be responsive to their mutual needs? The rice industry cannot be thrown under the bus under some misguided notion that “Governments cannot intervene in marketing”. Rice is exported and export means foreign currency to develop the country.
It is axiomatic that business must be regulated to further the overall societal good. But businesses cannot then be castigated for legally making profits within those regulations. The business community has been surprisingly apathetic and unresponsive to the refusal of the Government to both stimulate the economy and to foster entrepreneurship for export-led growth.

 

Today is Budget Day

In a move touted by Government as grand history in the making, and regarded by the Opposition as an opportunity to evade scrutiny, the country’s National Budget 2017 will be presented to the National Assembly by Finance Minister Winston Jordan today.

Parliament Building of Guyana
Parliament Building of Guyana

Stakeholders have already weighed in their expectations and are adamant to hold the Government to task to ensure measures are put in place to address pertinent issues affecting the various sectors of the economy.
Today the Finance Minister will stand and detail, without disruptions, the policies and programmes the Government has budgeted for the upcoming fiscal year 2017.
Opposition Leader Bharrat Jagdeo, though his party did not participate in the budget consultations hosted by government, outlined a number of initiatives he expects to be provided in the Budget.
In essence, he explained that these expectations are based on the promises and pronouncements made by President David Granger in his most recent address to the National Assembly.
“We hope that the Budget will address or put in place measures to address the problems of our society that will enhance social welfare, increase public safety and improve livelihoods – that is, the creation of jobs and income for people. We will support any measure that does this, that will meet anyone or achieve any one of those objectives,” he stated.
Jagdeo wants to see comprehensive programmes to promote a green economy, for instance, how will Iwokrama be transformed into an international institute for biodiversity; the process of reclaiming mined out lands, the establishing of protected areas in each administrative region; planning units in all the ministries; internet connectivity to Government buildings; development of towns, expansion of agriculture; and venture into non-traditional agriculture like spices, coconuts, and aromatic rice.
According to the Opposition Leader, these are initiatives the public should expect based on the Head of State’s speech.
That aside, Jagdeo said he has some expectations of his own, including the restoration of certain PPP programmes the Government quashed, like the water and electricity subsidies for pensioners and the ‘Because We Care’ cash grant for every student.
He also wants Government to reinstate the one-month tax-free bonus that was traditionally given to the Disciplined Services and for this to be further extended to all public service employees, including those working in the sugar belt.
Jagdeo also expects significant assistance to be offered to miners, loggers, and sugar workers.
Particularly, he hopes Budget 2017 will outline a detailed plan for the future of the Wales Estate: “We’re in favour of help for the sugar industry. We want a clearly defined plan with how the Government intends to move forward with the sugar industry. The Government is yet to clearly lay out how it plans to move with the industry. Do they plan to close factories, privatise factories, and scale down production? What diversity? Who did the studies? Are they economical viable social sector? We’re hoping that the Budget brings clarity.”
The Private Sector Commission also made some demands of its own, including for a permanent reduction of the Corporate Income Tax rate, over 10 years to 20 per cent; Reduction of Personal Income Tax, over 10 years to 20 per cent; increase income tax threshold to $100,000 per month; make all overtime earnings tax free; relief on outstanding loans for the rice industry; among others.
Both Opposition and PSC have called for concrete measures that will stimulate the economy and pave the way for Guyanese to enjoy a comfortable lifestyle.

FM

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