Senior Minister in the Office of the President with responsibility for Finance Dr Ashni Singh yesterday tabled a bill to pave the way for the implementation of the measures announced in the 2022 national budget.
The Fiscal Enactments (Amendment) Bill seeks to amend Sections 8, 20, 36, 36A and 60 of the Income Tax Act to “increase disposable income by increasing the income tax threshold from seven hundred and eighty thousand dollars to nine hundred thousand dollars.”
The government recently announced the planned increase of the income tax threshold from $65,000 to $75,000. This move, it notes, releases a total of $1.3 billion into the hands of current taxpayers, both in the public and private sectors.
The amendments to Sections 39(6), (13) and (14) of the Income Tax Act reverses the 2% withholding tax on resident contractors. During his budget speech, Minister Singh said that the tax 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 hence the government moved to have it removed from the register of taxes.
Additionally, the bill paves the way for Section 39(1)(c) to be amended to cater for the removal of the withholding tax on individuals with modest bank deposits. Moreover, Section 16 of the Income Tax Act was amended to make access to medical and life insurance more accessible to persons.
Minister Singh in his budget speech last week had said that the government is seeking to incentivize saving in the banking system by proposing to remove the withholding tax from individuals whose total interest income does not exceed $10,000 per annum. He said that this measure will cost $30 million and will bring much needed relief to those individuals with modest savings in the bank.
Further, Singh has said that the government is going to allow taxpayers a deduction from their chargeable income for premiums paid for life and medical insurance up to a maximum of 10% of their income or $30,000 monthly whichever is lower. This measure is projected to cost approximately $1.1 billion.
Section 23 of the Customs Act is to be amended to allow an exemption of import duty on more than one vehicle for remigrants. The Finance Minister had 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 the importation of a vehicle when they return. In this regard, the government proposes to revert to the more flexible arrangement that existed before 2015. Singh had told the National Assembly that it is estimated that these measures will place more than $25 billion in the hands of Guyanese businesses and individuals.
In its explanatory memorandum, the Fiscal Enactments (Amendment) bill states “this Act also seeks to amend section 23(1)(c)(i) and (ii) by the deletion thereof and insertion of new provisions, which provide that only the rates set out in Table A-2-2 in the Excise Tax Regulations shall apply and the Value Added Tax and Customs Duty be exempted.”
The bill also seeks to have all the amendments deemed effective from January 1, 2022.
