The Private Sector Commission (PSC) has advised that government to include a cut in the personal income tax from 33.3% to 28% in this year’s budget, saying that the introduction of VAT placed a greater burden on middle-income earners than on self-employed and other persons not captured in the tax net.
In a document titled ‘PSC Proposals for Budget 2013,’ dated January 15, 2013 and submitted to government for consideration for the National Budget, the PSC said, “A more progressive income tax will provide relief to those in the middle-income bracket.” It also considers VAT the more equitable and preferred taxation system going forward.
Also among the PSC’s proposals was abolishing property tax for individuals as “it represents triple or double taxation as persons paying property taxes are already paying withholding taxes on bank deposits and municipal taxes on property.”
While the group is gratified that corporate taxes had been reduced by 5%, it felt that further reduction by another 5% would lead to increased local and foreign investment and ultimately increased government revenue. The PSC therefore recommends that this reduction be effected over a five-year period at 1% per annum.
Addressing infrastructure, the PSC noted that the Georgetown harbour and channel require professional contract dredging as a matter of absolute urgency. “A deepened channel and harbour will assist in reducing the cost of doing business/increase competitiveness and lower the cost of living,” it said, while adding that the current state of the harbour prevents the entry of larger ships and restricts the volume of cargo that can be moved per sailing even on smaller vessels, thus resulting in increased freight cost per tonne of cargo and making low margin exports non competitive, the group added.
Once the initial dredging is completed, the PSC proposed that ongoing maintenance could be undertaken under a public-private partnership. It also advocated for the longer-term goal of establishing a deep water harbour, possibly offshore using a “casino-type” access system.
The PSC also recommended as priority the replacement of the Demerara Harbour Bridge, which it said has long outlived its 20-year lifespan. It further noted that the age of the current bridge leads to frequent downtime and costly repairs with the potential for a fatal occurrence.
“With the increase in the number of housing estates which have been developed on the western side of the river and with most employment and commerce still concentrated in the city and its environs, the current bridge is incapable of handling the flow [of traffic],” it noted, while adding that the development of the East Bank Essequibo road and attendant population movement, the traffic load on the bridge will increase. As a result, it recommended that funding for bridge design and associated logistical and environmental issues should be budgeted for in 2013.
Road network
The group proposed too that a new highway be built between the expanded Cheddi Jagan International Airport, Timehri and the East Coast Demerara–the Georgetown corridor. This will significantly reduce the congestion on the East Bank road, provide an alternative means of ingress to the city and promote the development of housing estates on higher land areas, it argued.
“Though the widening of parts of the existing East Bank road is in progress the road will be inadequate to handle the increased volume of traffic and further expansion costs using the existing route would be prohibitive,” the PSC said.
Further, it noted that establishing an East Bank Essequibo Parika/Bartica Road will foster development in the higher land areas adjacent to Bartica. It will provide access to mining areas in the upper Essequibo as well as agricultural zones in the lower Essequibo, and will impact positively on the development of tourism.
Regarding the Linden/Lethem road or rail, the PSC said it could not “overemphasise” the importance of developing this strategic link “as swiftly as possible.” Apart from the opportunity to increase Guyana’s exports to Brazil under the Partial Scope Agreement, it will also allow Guyana to serve as a conduit to the Atlantic for Brazilian goods, thus creating domestic employment from a range of services, it argued.
It is also contended that finalising this project has become very urgent as Suriname is moving rapidly to develop infrastructure to provide an Atlantic port for northern Brazil. “A real possibility exists that further delays could make Guyana redundant to Brazilian export interests,” the group said.
The group added that government should make a concerted effort to upgrade interior roads using contractors that are well-equipped and experienced, and to establish partnerships with primary users for ongoing maintenance over three-year cycles to support the contractors’ investment in equipment.
Interior airstrips in key areas, it also said, should be upgraded and rehabilitated to permit the use of larger and more cost-efficient aircraft that will provide the spin-off benefits of greater passenger traffic, expanded tourist travel, both domestic and foreign and the incentive for settlement in interior regions. Larger aircraft will also enable the export of higher value products to the coastal strip, it added.
Waste disposal
According to the PSC, funds should also be allocated to implement a proper waste disposal processing system and for land in a central location to establish paper and plastics recycling plants and drop-off points countrywide.
“These centres will require government support out of environmental taxes to fund collection and to support working capital and capital costs, the latter possibly on a one to one basis with private sector interests,” it explained. It added that it believes that the Haags-Bosch facility is inadequate and that arrangements should be made to either expand it or operate it 24-hours daily.
The PSC also urged the government to consider the option of generating electricity from waste using the Swedish incineration model. Though this option may not have been feasible a few years ago, since the level of waste generated was not enough to justify the high capital cost and fossil fuel prices were low, the current level of waste can support a waste-to-energy incinerator, it said. The resultant ashes generated from the incinerator can then be buried in landfills or mixed with asphalt for roads. Importantly, the group noted that the Swedish model also caters for flue gas recovery to avoid air pollution.
Energy
The PSC also proposed that government provide import tax relief, including relief from VAT, on imports of all alternative energy components, including solar, wind and micro hydro. It is also advocating that income tax relief be provided on the capital cost of alternative energy equipment to individuals wishing to convert their homes fully to alternative energy electrical systems such as solar.
According to the PSC, government should also expand the capacity of the Guyana Power and Light’s HFO [heavy fuel oil] fired power plant and introduce special rates to encourage manufacturers who generate their own power to return to the grid. “The capacity will in any event be required to support or provide backup to hydropower,” it said. A key issue to attract industrial customers will be the quality of the power, particularly the stability of the voltage, it further noted.
Export marketing
The Commission also posited that more has to be done to increase exports, particularly of non-traditional products and services. This would involve the allocation of funds for training exporters and potential exporters as well as for promotional exercises such as participation in exhibitions and fairs.
It also strongly advocated for an intensified “professionally acceptable” marketing of Guyana overseas and it would like to see substantial funds earmarked for this in the budget. This includes but is not limited to marketing the country as a nature tourism haven and enhancing its image which the PSC believes will have a positive impact on development. “In closing, the Private Sector Commission looks forward to maintaining the ongoing positive and constructive dialogue with the Government of Guyana and with other stakeholders, with the ultimate objective of ensuring job and wealth creation and significant development of the Guyana economy. We are heartened by the steady economic growth in the economy and look forward to contributing to further growth in 2013,” it added.
