The Private Sector Commission (PSC) says it has made a number of recommendations to the government which would ease the burden of taxation on the average citizen including a cut in the personal income tax rate and the zero-rating of flour and other food items.
In a release yesterday the PSC said that at a meeting with the Minister of Finance Dr Ashni Singh in December last year it recommended the increase of the income tax threshold to $35,000 per month and was pleased that the government had immediately introduced this measure.
Also recommended to Singh was a reduction of the personal income tax rate which is presently at 33.3%.
“A significant number of our population who had previously avoided paying tax are now doing so, substantially increasing government revenue and providing an opportunity for government to bring direct relief to large numbers of salaried employees and wage earners in the public and private sector”, the PSC said.
The umbrella private sector body said it has also urged the government to zero-rate additional food items to cater to basic needs, including flour, to reduce the cost of living to those persons operating below the threshold.
Further, the PSC has recommended the zero-rating of the tourism sector “which has been made uncompetitive in the region as a result of VAT”.
The PSC said it is satisfied that taken all together these measures will work to the advantage of the average Guyanese, stimulate business activity and increase the revenue flow to the government.
It was noted in the statement that the PSC had supported the introduction of the Value Added Tax (VAT) from its inception because it ensures “the equitable distribution of the tax burden and tax collection across the country”.
The PSC said that it was confident that the reduction of personal income tax will lift the earnings of workers confronted with a cost of living increase driven by external conditions.
“The escalating world price for imported fuel and food and the fact of the depreciation of the US dollar to which the Guyana dollar is tied against other major currencies, are major factors contributing to the rise in the cost of living”, the PSC said.
Arguing that Guyana must meet the challenges of these factors in a practical and measured way, the PSC also said that the adjustment of corporate taxes will also enable Guyanese companies to compete on even terms under the Caribbean Single Market and Economy and lead to the creation of new and better paying jobs.
The private sector body said it remains committed to a gradual process of tax reform in partnership with the government through the national competitiveness strategy.
The statement from the PSC follows scathing criticism by Sunday Stabroek business page columnist Christopher Ram of an earlier statement by the PSC on December 23 saying that the government should use the surplus take from the 16% VAT to reform income and corporate taxation.
Ram in his column of January 13 had flayed the PSC for suggesting that Guyanese who could ill afford it should continue paying a 16% VAT rate on items such as flour and cooked food so that the VAT surplus could be used to finance lower rates of corporate and income tax for those earning relatively so much more.
The need for comprehensive tax reform was also emphasized.
