Dear Editor
The actual and expected boom of the economy provides an excellent opportunity for the Government to implement structural policies to remove the scourge of poverty in Guyana. The IMF forecasted the economy to double in GDP from US$7.8bn in 2021 to US $14.1bn in 2025. How will this phenomenal economic growth impact the 35 % of the population living below the poverty line? Will the wealth increase the gap between the rich and poor or will it be used to increase the happiness and well-being of all the people? Will the Human Development Index grow concomitantly with the growth of the GDP? Tax incentives increase the disposable income of income earners. It has no impact on the population’s 15% underemployed, or the 32% unemployed young persons, who are unable to earn an income due to lack of employable skills and opportunities. The success of a country is not measured only by impressive GDP and tax incentives but in large part by the enduring development of its people and their capabilities. In addition to income measures, it would require a study of the multi-dimensional non-income measures such as deprivation of education, health, and other living standards. This article briefly addresses some policy suggestions for designing a modern universal social safety net that is fair, equitable and transparent to build a just and progressive Guyana. These policy suggestions will need to be fleshed out. The defects of the current system need to be determined, and effective change must be implemented without actual or perceived unfair ethnic or regional favouritism. It does not address the wider socio-economic dimensions of the country, such as the impact of oil versus non-oil economy, capital versus current expenditure allocations, and climate change. It also does not pretend to provide an exclusive analysis. It begs for an inclusive discussion of the subject matter as a pressing and existential aspect of a comprehensive long-term socio-economic framework for human development for all Guyanese.
National Insurance Scheme
This scheme is designed for the needs of the adult working population. Besides the dollar payment, based on contributions, it should provide a mechanism for securing reliable employment services to the unemployed, seasonal employment and new industries. This must include income support, along with training and skills framed around the policy trajectory of the economy and labour/service market. Many countries are scrambling to figure out how to cope with the labour fall-out of Covid-19 pandemic. The NIS should have built-in-flexibility to cope with periodic increase in benefits during extraordinary life event situations. Knee-jerk reactions such as one-off lump-sum handouts will bring temporary relief but cannot deal with long-term impact on the labour force and the economy.
Income Support Programs
The Government has a golden opportunity to reduce poverty by implementing programs aimed at vulnerable groups of the population so that no household lives below the poverty line. Poverty is experienced by having insufficient money to pay for the necessities of life, such as food, clothing, shelter and utilities, and transportation.
Universal Child Benefit
Guyana is party to the UN Convention on the Right of the Child where it promised to protect children rights and to make sure children enjoy all the rights in this Convention, specifically, that children have the right to food, clothing, and a safe place to live, so they can survive and develop in the best possible way. The Government can fulfill this promise by helping families and children who cannot afford this. Many countries have child benefit programs whereby each family is provided with a dollar amount periodically, usually monthly, for each child to the age of 18 years old. Countries with progressive taxation systems experiment with household income test to fix graduated amount per child. Others have implemented universal fixed amount for each child regardless of household income levels on the rationale that all children are equal and the simplicity of executing the programme. Some percentage of the basic cost of living index can be used to fix the amount per child. Instead of discretionary one-off cash grant, a tax-free monthly benefit should be given for each child to help parents and caregivers shoulder the costs of raising children in Guyana. No child should be left behind.
Universal Elderly Supplement
The elderly represents one of the most vulnerable members of our society. Many depend on NIS, but a large percentage do not qualify for this benefit. Their working lives may entail activities that caused insufficient or no contributions to be made to the Scheme. A guaranteed elderly supplement pegged, at least, at the minimum cost of living index, should be available for the elderly with disposable income below a certain annual indexed amount. For a fair and equitable basis, all elderly individuals could be paid a fixed amount (as is currently in place), and the supplement will be paid to those as a top-up to guarantee a minimum standard of living.
Universal Less-abled Benefit
The UN Convention on the Rights of Persons with Disabilities requires participating governments to implement policies to respect the dignity of persons with disabilities and to provide for their full participation and inclusion in the society. In addition to the need for sufficient money to pay for the necessities of life, persons with disabilities require enabling aids and accessories, including hearing, visual, mobility, and personal support, and behavioural assessment and intervention. Providing appropriate disability tax credits will go a long way to enhance the ability of differently-abled persons to fully participate in the economy. Qualifying for public assistance should not be done as a matter of discretion of assessment officers, but must be structured, with fair and transparent criteria, to provide benefits as of right to those deserving of assistance. Mental health of the population must be given immediate priority. A modern Mental Health Act is needed to lay out the powers and duties of mental health facilities with clear guidelines for assessment, care, and treatment.
Universal Health Care
The physical, spiritual, mental, and emotional health of a nation’s population is essential for the social and economic development of the country. Guyana can distinguish itself as a progressive nation by implementing a national health plan providing universal and equitable access to doctor and hospital services throughout Guyana. This will entail availability of medical service without paying from your pocket, plus limited drugs coverage based on a combination of factors such as age, income, and employment to reduce undue financial hardship. Guyanese deserve world class health care. The high suicide rate in Guyana must be taken seriously that happy healthy people do not kill themselves.
Universal Free Education and National Housing Strategy
Access to the means for education and life skills is vital to the success of a country’s future. It is not beyond the Government’s treasury to provide all academic and skill-set education, including textbooks, computer, uniforms, and transportation, free from elementary level to university level. The transition of Guyana into an industrialized nation can be greatly enhanced by the immediate implementation of a nation-wide trade skills program.
The housing sector can be broadly grouped into those who can afford housing through the operation of the marketplace, and those who cannot afford housing through the marketplace. Further, the marketplace may not cater for the special needs of groups such as the elderly, persons with disabilities and those seeking refuge from abuse. Countries have different criteria for measuring affordability. Generally, housing becomes unaffordable when housing costs exceed 30% of one’s disposable income. The Government should embark on a National Housing Strategy with specific goals and time frames to provide subsidized housing for vulnerable members of the population. Assistance in the rental, ownership and cooperative ownership of housing can be undertaken by the government through participating private, public, and not-for-profit agencies for temporary and permanent affordable housing. There must be continuous financing to keep the national housing strategy financially viable for the long-term. Universal free education and affordable housing will be dealt with in future articles as these matters deserves full attention.
Open to Abuse
Free money and benefits are open to abuse by the population and the bureaucracy alike. It is therefore essential that these programmes are fair, equitable and transparent with sufficient safeguards and independent stewardship. They cannot be determined by ad hoc ministerial discretion but must be based on sound economic and social policies that will guarantee regular long-term support for the population with special needs. Progressive countries have found that their Revenue Authorities are in the best position to collect and process financial information to ensure that those who truly are deserving of these means-test programmes benefit from them. Guyana Revenue Authority (GRA) can play a meaningful role in the successful operation of these programmes. GRA is in the pivotal position to gather qualifying information and to monitor payments and overpayments, while having the ability to recoup overpayments from future entitlements. Its time Guyana Revenue Authority take up its rightful mantle as a world-class outfit ready and able to play an integral role in a humane and progressive Guyana.
Irresponsible call to abolish Income Tax
Abolishing Income Tax on the premise of windfall revenues from oil and gas is, at best, short-sighted. These revenues should be utilized to fortify Guyana’s physical, industrial, agricultural, manufacturing, educational, medical, and housing infrastructure to buffer against the Dutch disease looming in the horizon. Instead of legalizing the avoidance of paying taxes on income and sales, the tax system should be strengthened to close loopholes. Greater penalties should be imposed on tax avoiders, while incentivising compliance. The taxation system needs to be fair, equitable and transparent. A just income tax system must contribute to the public good rather than towards national debt and private benefit. The programmes suggested in this article will certainly satisfy the public good.
Moving in the right direction
The 2022 budget estimates allocate $115bn to the social services sector, representing 20% of the budget with an increase of 17% over the previous year. A long-term strategic plan with specific national programmes, such as universal child benefit and senior supplement, would have greatly enhanced the value of the budget in line with the Government’s National Development Priority. After all, the benefit of social expenditure must be linked to human development to improve the poorest economic, social, cultural, educational, health and civic capabilities under defined living and regional conditions. Balanced regional development, correcting regional disparities, will enhance integration and unity among all the people. I believe that the President and Government mean well for all the population, rich and poor. There are many admirable social benefit programs already in place. I am confident that the Government will soon explore and incorporate the policy suggestions mentioned in this document in a comprehensive long-term national strategic plan. Central to its success will be appropriate professional advice and broad consultation with the affected population. More capital expenditure for laying down the infrastructure for a modern social service sector will be a welcome start.
Sincerely,
Tameshwar N. Lilmohan
Barrister Solicitor & Chartered
Professional Accountant