By John M Seeram
Financial/Audit Consultant
Since the presentation of proposed 2017 Budget, there have been both positive and negative statements being expressed. The presentation was timely since a budget should be prepared, presented, approved, and ready to be implemented at the commencement of the fiscal period. In this respect, the government is to be complimented for having a budget ready to be executed on January 1, 2017.
The revenue and expenditure budget is a segment in the government’s financial process. This process commences with the preparation, presentation and approval of the budget; the approval is embodied in the Appropriation Act. Thereafter, there is the execution of the revenue and expenditure recurrent and capital budgets, followed by the accountability function by means of compliance with the checks and balances in the system.
The focus is whether systems are fully in place in 2017 for the execution and accountability of this $250 billion budget.
Let me commence with the 14 per cent Value Added Tax (VAT). The reduction by 2 per cent was long overdue. I am not aware that we have tested systems in place to meet the various VAT requirements, mentioned in the minister’s budget speech.
Secondly, is the staff trained to carry out the present and future VAT requirements? It is my view that urgent intensive and relevant on-the-job training is required, if not, taxpayers will continue to get the ‘royal push around’ at the Guyana Revenue Authority (GRA).
The GRA has a big task in 2017 to carry out the tax requirements in the 2017 Budget. Does it have the required complement of staff to do the various revenue tasks? In my opinion and I am subject to correction, it will need to determine the optimum staffing level required to fulfil the budget mandate if it is currently short of staff.
I will now address the payment of VAT for electricity and water. The delivery of electricity and water as at December 2016 leaves much to be desired. With regard to the Guyana Power and Light (GPL), power outages are a factor. (As I was preparing this article, there was a blackout from 20:40 hrs to 23:05 hrs on Tuesday.) Meters are constantly in short supply and the service to consumers needs to be improved and be timely. The statement that only 20 per cent of GPL’s consumers who pay $10,000 and more monthly will be required to pay VAT, appears to be questionable and should be confirmed by GPL in an audited statement.
On water distribution, the water is yet to be crystal clear and wholesome. Full water pressure through our taps is yet to be provided on a 24/7 basis. In the urban centres, most homes are equipped with pumps in order to boost the water pressure. In many rural areas there is not enough water for daily use. The billing system is yet to be functioning in an acceptable manner since the commencement of the Guyana Water Incorporated (GWI) on May 30, 2002. No statistics were provided on the percentage of those consumers who will be required to pay VAT. Isn’t it readily available?
The issue is that both GPL and GWI should be delivering acceptable quality products and services before asking consumers (who qualify) to pay VAT. I am not stating that VAT should not be charged, but it should be implemented when the quality assurance standards are fully met.
There is need for a review of staff complement at the budget agencies in the public service in order to determine the optimum staffing levels, taking into
consideration we are now in the information technology era. I am aware that staff in the public service are exposed to on-the-job training, but how effective has it been? For example, it is view that staff at all levels in the budget agencies have been lethargic in their approach to performing their respective tasks despite the significant pay increases they have received over the past two years? Further, there isn’t effective inter-agency coordination and cooperation, and the management and strategic planning in these agencies are below the accepted norm.
My interfacing with public service staff has revealed that they need to be exposed to effective training with emphasis on improving and developing their skills in the performance of their tasks. Training of staff to perform on the job at the accepted level is an important requirement for a successful execution of Budget 2017.
The final phase in the financial cycle is the accountability function. Checks, balances and timely action have to be in place in the execution of the budget. In this regard, internal auditors, senior management, accounting, and supervisory staff have major roles to play. The result is that we must obtain value for each dollar spent accordingly. On a brief note, there is need for more trained internal auditors at budget agencies. It does not appear to be a priority and should be addressed early, more so, taking into consideration the findings in the 2015 Auditor General’s Report.
In closing, the proposed budget, once passed, is to be implemented beginning January 1, 2017. The budgeting process requires that adequate and effective systems should be in place to execute this budget. It is my view that there are serious shortfalls in the respective operating systems, and they should be addressed early.
