Finance Minister Dr Ashni Singh on Wednesday disclosed that government was able to grow its tax revenue collection by 16.8% in 2021 which amounted to $255.1 billion in earnings.
The disclosure was made during his budget presentation to the National Assembly where he informed that tax revenue collections accounted for 96% of the total current revenue collected. In 2020, Guyana collected $218.3 billion in taxes.
“Mr Speaker, the strong performance of the economy and expanded activity across multiple sectors resulted in revenue gains that more than offset the annualised loss from the revenue measures implemented in the 2020 and 2021 budgets. As a result, total current revenue net of inflows of the Guyana REDD+ Investment Fund (GRIF) in 2021 was $265.8 billion, 16.7 percent above 2020 collections,” he said.
Providing a breakdown of the tax collection regime, Singh told the House that internal revenue collections increased by $20.1 billion or 17.8% in 2021 with the increase being driven by higher collections of personal income tax (PAYE), private-sector corporation taxes, and withholding taxes.
The $8.2 billion increase in personal income tax was driven by higher remittances by employers in both the public and private sectors. Minister Singh informed, in his more than five-hour budget speech that the collection of private-sector corporation taxes grew by 22.6% or $6.9 billion due to higher payments by companies within the retail trade, telecommunications, and manufacturing of beverages sectors, among others.
The oil and gas sector is largely responsible for the $4.8 billion growth in withholding taxes according to Singh.
On the Value Added Tax (VAT) front, the Minister informed that the zero-rating of several previously standard-rated goods and services, the cap on freight charges used to calculate taxes on import, as well as more timely payment of VAT refunds by the Guyana Revenue Authority (GRA) is primarily responsible for collection being $1.5 billion less when compared to 2020. In 2021, VAT collection totalled $48.4 billion.
“Value-Added Tax (VAT) and excise tax collections increased by $10.9 billion or 13.1 percent. Excise tax collections grew by $12.5 billion, above the $33.9 billion in 2020 as a result of higher tax collections from the importation of motor vehicles and petroleum products,” the Finance Minister related.
In 2020, collections from VAT (net of refunds) were $2.8 billion lower than the Budget 2020 projection, on account of lower collections from both imported goods and domestically supplied goods of $2.4 billion and $368.3 million respectively, Singh had said when he tabled the 2021 budget.
Singh further boasted that the PPP/C government’s reversal of the ban on importation of vehicles more than eight years old saw an increase of $6.7 billion in revenue collected from the importation of vehicles.
“Customs and trade tax collections were $27 billion, a $5.7 billion increase above its 2020 level, resulting from higher
collections of import duties of $5.1 billion from goods imported within the wholesale food, beverages and tobacco category and retail sales of hardware, paints, glass, automotive fuel, household appliances and furniture, all reflecting the resumption of economic activity and growth in disposable incomes,” Singh said.
In respect to non-tax revenue, he said collection amounted to $10.7 billion which represents a $1.3 billion climb from 2020 and is credited to higher transfers from statutory bodies and profits from the Bank of Guyana.
For 2021, Central Government’s expenditure totalled $387.3 billion which was $61.8 billion above the amount expended in 2020. Singh said that within Central Government’s expenditure non-interest current expenditure was $275 billion representing a 13.8% growth and was primarily driven by the expansion in other goods and services of $17.8 billion and transfer payments of $9.6 billion.
He explained that the higher expenditure within the goods and service category was mainly due to more than $7 billion in payments to farmers and households for flood relief assistance to recover from the floods. Further, there was higher spending on COVID-19 vaccines due to the countrywide vaccination programme rollout.
“The growth in transfer payments resulted from such factors as the restoration of the grant to parents of children attending school as well as the extension to private school students, along with growth in training such as through the provision of 6,000 online scholarships through the Guyana Online Learning Academy (GOAL). Capital expenditure grew by $28.3 billion to $104.4 billion, on account of the ramped up PSIP to support critical infrastructural development, including transport infrastructure such as roads and bridges, as well as in the social sector such as schools and public health care facilities. A significant contributing factor was also the resumption of the aggressive Government housing programme,” the Minister related.
At the end of 2021, public enterprises recorded an overall deficit of $6.2 billion with total receipts at $140.3 billion representing a 20.2% increase from 2020. Additionally, total expenditures were $146.5 billion or 24.1% higher than what was expended in 2020 and according to Singh, the major contributory factor was higher operational costs at the Guyana Power and Light Inc (GPL) due to increased oil prices.
