Leader of the Opposition Bharrat Jagdeo yesterday called on President David Granger to convene his Cabinet and withdraw the proposed 2017 budget or examine the concerns of society and remove some of the most oppressive measures, which he said would devastate the lives of many poor people and will cause the productive sector to regress.
He said that the People’s Progressive Party (PPP) has several ideas they are willing to share with government if the administration were willing to reconsider the budget presented. The PPP did not take part in budget consultations.
“We are prepared, if such a process is initiated, to collaborate with the government to share our ideas as to how we can achieve the objectives of growing our country, creating incentives for the private sector and enhancing welfare of ordinary people without implementing these draconian measures,” Jagdeo told a news conference.
Jagdeo, a former president who is an economist, was scathing on the proposed changes to the Value Added Tax (VAT) regime, which will see several key services being taxed. He stressed that these changes will drive up the cost of living.
During his presentation of the proposed budget on Monday, Finance Minister Winston Jordan announced both plans to reduce the 16% VAT to 14% as well as to apply it to monthly electricity and water bills exceeding $10,000 and $1,500, respectively. Jordan also announced that he proposed to increase the VAT registration threshold from $10 million to $15 million, as well as to expand the list of exempt items and eliminate all zero-rated items, with the exception of those pertaining to exports and manufacturing inputs.
These measures will see VAT being charged on private education and health services as well as internet services.
Additionally, government proposes to grant the Guyana Revenue Authority (GRA) the right to garnish the bank accounts of defaulting taxpayers and prevent them from travelling.
Referring to these and other measures as “draconian,” Jagdeo called for President Granger to take responsibility for the contents of the budget as well as for responding to the concerns of the general citizenry, private sector and civil society.
“This is not Winston Jordan’s budget. It is the executive’s budget.
The president bears responsibility because it is his government. He must take responsibility for the budget presented. No president should want this during his tenure,” he intoned.
Quoting from Jordan’s presentation to the National Assembly, Jagdeo told reporters this is not the end of it; this is really just the start.
In his speech, Jordan noted that the government is “about to embark on a new generation of tax reform, starting from budget 2017.”
Jagdeo questioned what exactly will be in the next budget if this is just the start, especially since Jordan is making these decisions based on two documents (reports from the Tax Reform Committee and the Caribbean Regional Technical Assistance Centre) which have not been debated by the National Assembly.
Jagdeo also attacked the argument that the minister had to extend the items covered by VAT so as to recover revenue lost by reducing the tariff by 2%
He reminded that Jordan had said that “tax revenue is expected to increase by 8.9 percent to $162.6 billion, reflecting a considerable increase in collections of VAT, due to the measures to be implemented, in 2017.”
“They were not trying to recover revenues lost. Contrary to the promise, they were trying to considerably introduce and recover more VAT. If it was just to recover, he might have had a case but this is not a revenue neutral measure, it is revenue enhancing,” Jagdeo explained.
Asked if his party should accept some blame for the budget measures since they did not accept an invitation to participate in consultations during the drafting, Jagdeo said “we are not shouldering any blame. Any government that wants to see progress would not propose a budget like this. They don’t need the PPP to tell them not to tax education and medication.”
He stressed that any government which is not callous and uncaring, would in the face of the objections, at the very least review the budget.
