Dear Editor,
I refer to your editorial in Stabroek Business, captioned ‘The silence of the lambs?’ (28.12.07) in which it was stated: “If the virtual silence of the Private Sector on issues that have a direct bearing on businesses and the economy is a reflection of fear of reprisals or victimization then that is a very disturbing state of affairs indeed,” and I would like to make the following points:
1. The Private Sector Commission (PSC) recently released to the entire media (Sunday, December 23, 2007) a statement on its meeting with the Minister of Finance to discuss the 2007 mid-year report on the economy. With the release was attached a Technical Bulletin of our analysis on the performance of the economy for the first six (6) months of 2007.
Unfortunately, only Stabroek News chose to carry this, but omitted the most important part of our release as follows:
“The PSC, while recognizing the impact that global factors were having on prices in the domestic and regional markets, reiterated its position that, rather than reducing the 16% VAT rate, Government should use the surplus revenue collected (see PSC’s Technical Bulletin) to start the process of reforming the remainder of the Tax System, especially income and corporate taxes.”
This view is consistent with our public position on tax reform. Our argument for the lowering of the corporation tax is in recognition of the fact that if Guyana is going to compete with Barbados and Trinidad in the Caricom Single Market and Economy for direct foreign investment, we must have a competitive tax rate in order to attract these investments to our country. The idea of reducing corporation tax is to do so incrementally without losing revenue. This can be achieved with higher GDP growth rates. The Irish model is a good example of this philosophy.
The second point to make is that your perception of our public silence is probably more reflective of a cautious, and in our view more mature, approach to engaging the political administration, rather than fear of reprisals or victimization. Our objective now is to achieve tangible results such as high GDP growth that is necessary to move our country forward and to focus our energies on the positive areas where we feel that we can make a difference. The National Competitiveness Strategy with its partnership arrangement with the private sector and labour is the vehicle the administration has provided to have meaningful engagements. We support this and fully intend to do our part to make this process work successfully.
The last and perhaps more relevant point is that while the increase in the cost of living is on the mind of most Guyanese at this point in time, and there are many who are preaching doom and gloom, ironically perhaps, Guyana is now better positioned for economic expansion than ever before. The 5.8% GDP growth achieved in the first half of 2007 following the 4.7% of 2006 is impressive, and is indicative of continued expansion. Even without VAT the collection of taxes in most areas has also been impressive. This, coupled with the reduction of Guyana’s national debt to less than US$700M, and with debt servicing down to only 5% of revenue, seems to suggest that Guyana’s Economic Recovery Programme which started under former President Hoyte and now completed under President Jagdeo has been largely successful. Guyana is no longer a bankrupt country, and accordingly the government has much more latitude to improve the welfare of all Guyanese. Also while some businesses and sectors have been affected negatively by the VAT, on the whole, the impression is that the corporate sector performed well in 2007.
These factors augur well for the Guyanese economy going forward, and should create the platform for increased prosperity for the nation in the future.
Yours faithfully
Michael O. Correia, Jnr
Chairman
Private Sector Commission
Editor’s note
The portion of the press release referred to by Mr Correia was carried in a Stabroek News report and formed the basis for the headline (see SN December 24, page 3).
