Finance Minister Ashni Singh this afternoon announced that the income tax threshold had been lifted from $35,000 per month to $40,000 per month and he also unveiled a drop in the corporation tax.
In a lengthy presentation under the theme `Together Building Tomorrow’s Guyana Today’ Singh said that the personal income tax threshold would be lifted from$420,000 per annum to $480,000 per annum.
“As a result of this adjustment: every single taxpayer will benefit from higher take home pay: a taxpayer earning $40,000 per month will now pay $20,000 less in income taxes in a year; and (approximately) 38,000 taxpayers will be removed from the income tax net”, Singh said in his three-hour-long presentation.
Whereas commercial companies previously paid corporation tax at the rate of 45% of chargeable profits, with effect from year of income 2011, the rate will be 40% of chargeable profits except for telephone companies.
The corporation tax for non-commercial companies will also be cut from 35% to 30% of chargeable profits for year of income 2011.
“…companies benefiting from this measure would be in a position to retain and reinvest a significantly higher share of their profits”, Singh told the National Assembly in his fifth budget presentation.
Old age pensions
Old age pensions will also go up by 14% and public assistance by 12%, Singh disclosed as he presented the $161.4B budget, 13.1% above last year’s.
With effect from February 1, 2011 old age pension will be paid at a rate of $7,500 per month compared to the $6,600 paid monthly to 42,000 pensioners.
Public assistance is presently being paid at a rate of $4,900 per month to 9,000 beneficiaries and this figure from February 1, 2011 will be $5,500 or 12 percent higher.
“It is worth noting that, just four years ago in 2006, public assistance was paid at a rate of $2,350 per month. This latest increase therefore has the effect of causing the rate that is paid from next month to be more than double the 2006 rate”, he said.
Targets
The economy is projected to grow by 4.6% in 2011 with the non-sugar economy expected to grow by 2.8%.
Touching on the troubled sugar industry, Singh told the National Assembly that the industry “has given certain asurances that provide some room for confidence that the turnaround will be accomplished.” Reflecting the expectation that there will be a recovery, sugar production for 2011 is pegged at 298,879 tonnes – 35.3% above last year’s production.
Production in the rice industry is expected to go beyond 379,628 tonnes which would be the highest ever level of production and generate a 4.9% increase in value added.
“This reflects increased yields from the fields as farmers benefit from improved varieties of rice and also the expectation of favourable weather conditions”, the Finance Minister said in his 63-page budget.
The bauxite industry is expected to recover with a 12.7% growth in production to 1,220,000 tonnes as demand for aluminium continues to strengthen.
Singh said that gold declarations are expected to grow by 2.9% to 317,416 ounces while diamond output is budgeted to drop by a further 10% as the migration to gold extraction continues.
The mining and quarrying sector is expected to grow by 2.8% while the manufacturing sector is projected to expand by 7.7%. The latter figure reflects increased processing activity from higher levels of sugar production.
Agriculture
The livestock industry is expected to maintain its output this year while the other-agriculture sector is pegged to grow by 2% “reflecting the returns on the agricultural diversification programme and the Grow More Food Campaign”, Singh said.
In terms of services, Singh said that the information and communication sector is expected to lead the way with a 5% growth. The engineering and construction industry is targetd to grow by 4.5%.
Inflation
The inflation rate is projected at 4.4%. The overall balance of payments is projected to achieve a surplus of US$24.4M compared to the US$90.1M surplus at the end of last year. “This is attributed to a projected widening of the current account to US$385.6 million due to higher import commodity prices outweighing the projected higher export earnings”.
VAT
The value added and excise taxes are expected to bring in $50.2B this year, 3.9% higher than last year primarily due to higher collections on imports and on domestic supplies.
Total expenditure for this year is estimated at $157.7B, a hike of 18.4% over last year. Current expenditure is projected to rise by 10.6% to $95.5B while capital expenditure will shoot up by 33% to $62.1B.
“The growth in non-interest current expenditure is primarily attributed to (the) cost of conducting general and regional elections in 2011, with the Guyana Elections Commission’s recurrent allocations being increased by a total of $2 billion to accommodate this cost”, Singh said.
