Parity in Tax Treatment for
Local Content
In the interest of ensuring that Guyanese businesses can compete successfully under the new local content framework in the oil and gas sector, the Government will take steps wherever practicable to minimise disparities arising from the tax system that will disadvantage Guyanese businesses against their international counterparts. This will help improve the competitiveness of Guyanese companies, help secure business opportunities for them, and thereby create jobs for Guyanese nationals.
Supporting Renewal of the Industrial and Commercial Transport Fleet
Noting that the transportation fleet has become vital to oil and gas sector, the Finance Minister, Dr Ashni Singh said that the government would like to enable Guyanese businesses to renew and expand their transport fleets and, additionally, to do so by acquiring, newer, safer, and more efficient vehicles.
To this end, the following measures will be implemented:
a) In relation to importation of new motor trucks of any tonnage for transport of goods (new for the purposes of this paragraph refers to vehicles less than four years old), the 10 percent excise tax will be removed as well as the 14 percent VAT that currently applies.
b) In relation to importation of new haulers for pulling containers or similar vehicles for pulling, the VAT of 14 percent that currently applies will be removed.
c) In relation to importation of new double cab pickups below 2000 cc the government will remove the currently applicable 10 percent excise tax altogether, while for new double cab pickups between 2000 and 3000 cc the government will reduce the excise tax from 110 percent to 75 percent.
d) In relation to importation of new single cab pickups below 3000 cc, the government will remove the currently applicable 10 percent excise tax altogether.
Reducing the Cost of Cranes, Safety
Equipment, and Oil Spill Equipment
The 14 percent VAT will be removed on cranes, safety equipment, and oil spill response equipment, all as part of ensuring that as many Guyanese businesses as possible can equip themselves accordingly.
Advance Tax on Resident Contractors
The 2 percent withholding tax on resident contractors is being removed. The Finance Minister said that the tax very severely affected the liquidity of resident contractors and therefore also undermined their competitiveness. It also proved challenging to administer, with very uneven compliance, particularly outside the Central Government.
Easing the Cost of Living
Farmers Markets
In the interest of reducing inefficiencies in the supply chain, the government will be arranging monthly farmers markets at locations to be specified in East Berbice, East Coast Demerara, Georgetown, East Bank Demerara, and West Coast Demerara in the first instance, with the possibility of extending to other locations depending on the initial experience. This will help farmers find ready markets for their produce, he said.
Extending the Freight Cost Adjustment
In August 2021 an adjustment to the freight cost component in the CIF value used for calculation of import taxes was implemented, rolling back freight costs to pre-pandemic levels. This had the effect of reducing the import duties, excise taxes, and VAT charged on imported items, the Finance Minister said. This measure will be extended until 31 December 2022.
Reducing the Cost of Fuel
The Finance Minister noted that twice in 2021 the excise tax rate on gasoline and diesel was lowered from 50 to 35 and then from 35 to 20 percent. He announced that, utlilising the same established mechanism, the government will be lowering the excise tax rate further on gasoline and diesel from 20 percent to 10 percent, with immediate effect.
Other Cost of Living Measures
Given the complexity of the factors driving price increases and the limited policy instruments
available to mitigate these increases, the Minister of Finance said that the government intends to engage in further consultations with the communities most affected both on the coast and in the hinterland on possible interventions to help ease the impact on the most vulnerable in our society. To this end, we have allocated a sum of $5 billion to meet the cost of the interventions to be implemented following these consultations.
Supporting the Vulnerable
Support to Dialysis Patients
The Finance Minister noted that currently there are hundreds of persons undergoing treatment for life-threatening conditions. A prime example is the number of persons currently receiving dialysis treatment, many of whom are young people still in the prime of their lives, but oftentimes struggling to meet the cost of their treatment. To this end, he said that the government will introduce a Dialysis Support Programme under which $600,000 per annum worth of dialysis treatment will be provided for each and every dialysis patient in Guyana. This programme will provide assistance to almost 300 persons at a cost of $180 million.
Public Assistance
This year, the government will be increasing the monthly Public Assistance payment from $12,000 to $14,000, benefiting 18,000 persons and providing an additional $432 million in disposable income to these individuals.
Support to the Elderly
The Finance Minister noted that the government increased the old age pension by $20,500 to $25,000 monthly. He said that the government will be increasing the Old Age Pension further from $25,000 to $28,000. This will place an additional $2.3 billion of disposable income in the hands of 65,000 old age pensioners.
Increasing Disposable Income
Uniform Grants for School Children
The uniform grant will be increased this year from $4,000 to $5,000 per child. This will place $200 million of disposable income in the homes of 200,150 children attending both public and private school.
Because We Care Cash Grants
The cash grant per school child is to move from $15,000 to $25,000 per child.
This will place an additional amount of $2 billion in the homes of the same 200,150 children attending both public and private school, the Minister said.
Incentivising Saving in the Banking System
In order to alleviate the impact of the withholding tax on individuals with modest deposits, the government is proposing to remove the withholding tax from individuals whose total interest income does not exceed $10,000 per annum. This measure will cost $30 million and will bring much needed relief to those individuals with modest savings in the bank.
Reducing the Cost of Life and Medical Insurance
The government is proposing to allow taxpayers a deduction from their chargeable income for premiums paid for life and medical insurance up to a maximum of 10 percent of their income or $30,000 monthly whichever is lower.
This measure is projected to cost approximately $1.1 billion.
Personal Income Tax
The government is proposing to increase the monthly income tax threshold from $65,000 to $75,000 monthly, thereby releasing a total of $1.3 billion into the hands of current taxpayers both in the public and private sectors.
Increase in the Low-Income Mortgage Loan Ceiling
The Finance Minister noted that there were two increases in the ceiling on low income loans that could be obtained through commercial banks under the low income housing loans programme supported by Government. The first was from $8 million to $10 million and the second from $10 million to $12 million. The government announced a further increase in the ceiling from $12 million to $15 million.
Stamp Duty on Retail Transactions
The Finance Minister said that a longstanding irritant to the business community and consuming public has been the requirement to affix revenue stamps on receipts issued for retail transactions, and compliance levels are very uneven. The government is proposing to abolish this requirement, specifically as it relates to retail transactions only. It is estimated that this will cost some $60 million.
Remigrants
The Finance Minister said that yet another one of the punitive tax changes made by the APNU+AFC in Government was to alter the entitlements of the remigrating Diaspora in relation to importation of a vehicle when they return. In this regard, the government proposes to revert to the more flexible arrangement that existed prior to 2015.
The Finance Minister said that it is estimated that these measures will place more than $25 billion in the hands of Guyanese businesses and individuals.
