Opposition Leader Bharrat Jagdeo yesterday laced into government’s proposed 2017 budget, charging that it shows no vision for investments and job creation and places an enormous tax burden on Guyana’s citizenry.
“This budget is about no jobs, no investments, bigger government financed local borrowing, more taxes and increased cost of living,” Jagdeo railed, as he delivered an almost two-hour analysis in the National Assembly yesterday as he closed the debate for the opposition.
Jagdeo contended that there is no evidence to show expansion of wealth for the populace or sound welfare policies. He accused the government of laying more burdens on the Guyanese population by way of taxes as the only way to develop the country.
“How can they say that they are attracting foreign investment when you only have at $8.5 [B] in 2017 coming from foreign direct investments? How can this happen. It says here that increasingly the investments in Guyana are being financed by domestic savings not foreign inflows. So what happens is after a while, that runs out and then reflects itself in a change in reserves or a deteriorating balance of payment position and exchange rate that will tank. This will put the pressure on the exchange rate in the future. Don’t worry about Trinidadians buying (US)$5M here in the market. This is it (and) it is very very dangerous. Many times we talk about other things and these go unnoticed,” he added.
Looking at the estimates of this year’s budget, Jagdeo said from analysis of Table one in the estimates, central government’s consolidated fund, which was $60.6B in 2015 will grow to $123B in deficit in 2017. “From ($)60B to ($)123B…the minister makes no secret … he has indicated that they are going to borrow more, they are going to spend more and from the local markets. Look at the monetary survey, you will see that the growth will go over 30%,” he added.
Jagdeo argued that the government is outstripping the private sector in borrowing from the banking system. It has run down all the positive balances in the banks. It is very, very dangerous. The government is taking a bigger share in the banks to finance its deficit.
A former finance minister, Jagdeo pleaded with government to listen to the cries of its people. Using the country’s poultry producers as an example, he noted that they have said that budget measures will see an increase in the price of the commodity by a staggering 22%.
And pointing to monies that will be brought in from the Value Added Tax (VAT) this year, Jagdeo accused government of being “disingenuous” when it lowered the tax from 16% to 14% but increased other taxes.
“The VAT, it goes from $35.9B in 2016 and in 2017 it will be $45.1B that is a $9B increase in VAT collection. The minister said this is not revenue neutrality he is collecting more money from VAT. When you go to the nation and you say ‘I will decrease the VAT from 16% to 14%, you are telling people you are relieving their tax burden. They don’t care the rate. They care about the burden. We have this obsession for rates but what they have done is increased the tax burden by $9.2B. This represents a 25.6% increase in VAT …in the collection of VAT. The new taxes are bringing in $13.7B more Mr. Speaker. That is a 38% increase,” he said to laments from his party’s members.
“We hear about three budgets in nineteen months and I see this as an indecent haste to the taxpayers not as an achievement. Why did they bring an early budget? …It comes back to taxes. If you had passed the budget in April of next year, many of these taxes could not have been applied so they wanted to pass it this year so they can start applying for tax from January. There is a motive here, Mr. Speaker, the motive is taxing people more and collecting from them,” Jagdeo also said, while pointing out that he believes that many of the numbers being assessed will change over the next few months.
Alliance For Change Leader and Minister of Public Security Khemraj Ramjattan was one of a handful of government ministers who stayed in the chamber for the duration of Jagdeo’s presentation and seemed to pay key attention to his every word. During the opposition leader’s presentation, Ramjattan responded directly to Jadgeo on those issues he felt he was not accurate on. Such was the case when Jagdeo spoke on the revenue that will be raked in from VAT.
“This VAT is going to collect much more than anticipated and you heard the Honourable Member Mr. Ramjattan say that I don’t like it and he is right. I don’t like it because it is coming from ordinary
people from our productive capacity. He is absolutely right, I don’t like it,” Jagdeo declared.
Pointing to local remissions, Jadgeo posited that it was hypocritical for government to take away remissions while simultaneously taxing the productive sectors. He pointed to the period between 2015 and 2016, saying that more than $5B in companies’ remission was pulled. “How are you going to talk about growth strategy? Isn’t it hypocritical that you are taxing them and are taking away their remissions too,” he said.
Fiscal Space
Using the controversial rental of the Sussex Street pharmaceuticals bond from PNCR member Larry Singh for some $14M per month, the opposition leader flayed government’s spending choices. Mention was also made of the D’Urban Park Project and the allocation of $225M for the Prime Minister’s office,
“In one year we will be paying close to $170M effectively for a bottom house. You had the fiscal space for that. Do you know… the money we set aside to pay an individual to single source condoms and lubricants, this is the urgency we heard of. Remember in this Parliament, they said ‘we could not wait we had to get it (the bond) urgently because the drugs spoiling.’ The condoms spoiling. The health services capital budget for Region 4 is $88M, you are spending twice as much on a bond to store some condoms than Region 4 health services,” he said
“It is bigger than the public works budget for Region 6, that one investment, for a region that maybe has 100,000 and that is governance? The entire education budget for region 10 is $98M and we are spending more on Larry Singh’s bond that for the entire education budget for Region 10. We are spending as much on this bond as the entire capital budget for Region 8, which is $206M. $170M on a single bond? Is it not shameful? “We don’t have fiscal space to give the constitutional agencies what they asked for… no fiscal space again is the cry although we will be increasing the budget of the PM’s office [by] $225M. That is more than the cost of six constitutional agencies. The budget there alone is equivalent to six agencies,” he added.
‘Reliability on research’
He blamed government’s 2017 tax regime on its reliability on too many research studies not relevant to Guyana and its economy. The former president reflected on not only his 10-year tenure as leader but the many years he worked as an economist with his party and sat in on discussions during budget planning period. “We had hundreds of studies, people came all the time but when these studies came to us, the judgement had to be exercised in taxment. Studies can recommend anything under the sun, sometimes you have these people who just out of university, just wet behind their ears come and tell us all sorts of things,” he said.
“Any president who is worth his salt will never allow any study to come here and tell us what to do in a sovereign country and use that as justification for passing burden. When they came and they said to me that to increase revenue neutrality you have to do 16% (VAT) across the board without any exemptions, I said not while I am president. This slavish mentality to studies done by foreigners is unbelievable,” he added.
“Obsession with indices don’t change countries’ policies; clarity of thought, direct incentives to the private sector do. We see a minister of finance that believes that every study done abroad must be implemented here,” he further said.
Jagdeo assured that the PPP/C will not go against any policies that are beneficial for the populace and the advancement of the country. “In this budget, anything that this APNU+AFC government does that will enhance growth and development in Guyana, we will be supportive of it. Anything that will ensure that there is more disposable income for people or that they access healthcare or education and other benefits, we will support on this side of the house,” Jagdeo said.
