While some union leaders are encouraged by government’s decision to await the end of the collective bargaining process to announce any increase in public servant salaries and wages, they are concerned that the planned raise of the income tax threshold will prove meaningless in the face of impending tax reform measures.
During his 2016 budget presentation on Friday, Finance Minister Winston Jordan did not announce increases for public servants, while noting that it would await the conclusion of discussions with the relevant labour unions.
General Secretary of the Guyana Trades Union Congress (GTUC) Lincoln Lewis said he is happy that the government is working within the ambit of the Constitution and the collective labour agreement, both of which make prescriptions for the collective bargaining process.
Jordan’s announcement of an increase last year, in the absence of any negotiations with unions, was criticised. The former PPP/C administration had also been criticised for imposing increases over successive years without any negotiations with unions.
“I am encouraged by government’s decision to return to collective bargaining. For them to take this position is a vindication of the work of the union, especially in light of the decisions they took last year without any consultation,” Lewis said.
He, however, added that it might have been better for the government to wait on the findings of the tax reform committee that had been set up before announcing an increase in the income tax threshold.
As part of what he called government’s measures to improve workers’ income, Jordan said the income tax threshold will be raised from $50,000 per month to $55,000 per month.
As a result, Jordan said during his 2016 budget presentation, over 68,000 workers will be removed from the income tax roll, and workers will have an additional disposable income.
The Tax Review Committee had been set up last year with the mandate of coming up with a range of recommendations to improve the system.
Jordan, however, reported on Friday that while it was expected that the Committee would have presented its report by
end-December, 2015, to enable implementation from this year’s budget, the report was submitted on January 18, 2016, which was too late for Cabinet to consider and pronounce on all of the recommendations. He did, however, note that some of the tax reform measures announced were in line with the Committee’s recommendations.
“They should’ve waited on the committee. Strategically, the society will not benefit if you raise the threshold now. Raising it now might mean that they won’t touch it again soon. I’m not encouraged by that strategy,” Lewis, however, said.
Lewis’ position on the suitability of the threshold appeared to be shared by the leaders of the Federation of Independent Trade Unions of Guyana (FITUG) and the Guyana Agricultural and General Workers’ Union (GAWU).
Carvil Duncan, President of FITUG, told Stabroek News that the increase in the threshold is not enough.
“When we met with them [the government], FITUG proposed an increase of the public servants’ minimum wage to $70,000. We anticipate that negotiations will see salaries increasing by at least 10% and that threshold increase will have no impact,” Duncan said.
Komal Chand, President of GAWU, one of the unions operating under the umbrella of FITUG, also believes that the threshold increase is “meaningless.” He explained that the new tax measures on licensing will see costs being passed on to the consumer. This, in conjunction with several other tax measures which “are still to be announced,” mean that those people who are at the bottom of the earning scale will not benefit, he argued.
“We expected more measures to help those at the bottom. What is being offered is not going to do much. Right now, we are looking at a dismal horizon,” he said.
Chand also raised concerns about the sugar sector allocation, which he says is a “disappointment” as it is not a commitment which matches the promises made by the government.
Jordan announced that government would inject $9 billion to assist the sugar industry in its recovery and modernisation programme. Although the state-run Guyana Sugar Corporation (GuySuCo) surpassed its 2015 production targets, he said the industry is threatened by weakening sugar prices, aged machinery and high production costs.
“If important capital works are to be done to raise production and make sugar viable and sustainable, then your allocation commitment has to be the $12 billion needed, not a fraction of that, not $9 billion,” Chand said.
