Dear Editor,
The announcement by the People’s National Congress-Reform, on Republic Day, that it is proposing the removal of income tax was quite a revelation and possibly one of the most enlightened proposals for sharing Guyana’s oil wealth.
The first question is, can the country afford it? The answer is a resounding yes. Revenues from personal income tax in 2021 were $42.9B or US$204M. This year Guyana is expected to receive 13 lifts of crude from the two FPSOs as part of the Profit Sharing Agreement. Fortuitously, it comes at a time when crude prices are high, and indeed, they hit over US$100 per barrel yesterday due to tensions over Ukraine. While it is hard to predict prices for the rest of the year, the general consensus is that demand for oil will be strong and that supplies will remain tight, so a price over $80 per barrel is not an unreasonable forecast. Since each lift for Guyana is made up of a million barrels that would be $80M per lift making a total for the year of around $1.04B, plus the nominal 2% royalty. So three of those projected 13 lifts, worth $240M, would easily cover the foregone personal income taxes.
The employed have for years been carrying the burden of taxes while corporations have either enjoyed concessions or found ways to underpay or simply not pay. Therefore it seems only fair that now is the time for this to be lifted from their backs and for them to see an immediate improvement in their financial circumstances. I would like to hear a more detailed proposal from the PNCR, and might suggest that this be limited to wages under $500,000 per month, so as to avoid business owners giving themselves large salaries in order to lower their corporation taxes. Another benefit would be a reduction in the workload of the Guyana Revenue Authority which could then increase efforts to recoup taxes elsewhere. It is something worthy of a national debate as it might be an elegant and simple way of addressing what is the most important topic in our society today. How will the average man and woman benefit from this oil wealth?
Sincerely,
Lynn Nicholas