The PNCR on Sunday pooh-poohed President Irfaan Ali’s announcement of a one-off cash grant of $200,000 to every household, countering with a proposal for a $400,000 per month tax-free threshold, which it would implement if elected next year.
In a statement, the party insisted that the tax-free threshold would not trigger inflation and the Dutch Disease and is the most prudent fiscal policy for this country. It said this proposal was part of the coalition APNU’s plan to end poverty here using sound economic reasoning.
At a party press conference on Friday, the PNCR/APNU stated that it had plans, should it get into office, to put a number to its long-standing policy proposal of increasing the tax-free threshold and introducing a tax allowance for personal income.
“We announced that, as the next government, we will set the threshold at $400,000/month in our first national budget. This threshold will also serve as a tax allowance, producing the double impact where those who earn $400,000 a month and less will pay no taxes and those who earn higher will pay taxes only on the amount above $400,000/month,” the statement said.
This proposal, the statement said, “would move the needle in the lives of over 210,000 workers: approximately 54,000 in the public sector, approximately 150,000 in the private sector, and several thousand self-employed persons. Coupled with the PNCR/APNU’s pledge to raise the salary of all government employees by 35% (graduated) and with its social programmes for all, the positive impact on poverty, economic insecurity, inequality, opportunity, and economic dynamism would be immediate, self-perpetuating, and self-augmenting.
“We project that the tax-free threshold and tax allowance would (i) help reduce poverty and economic insecurity as a government’s moral duty to guarantee citizens a decent standard of living and to respect and ensure their economic and social human rights; (ii) help create a demand-driven economy where the country’s productive capacity would expand in response, aided by the introduction of targeted facilitating conditions.”
Those conditions, it said, would include reducing the well-documented costs of doing business in Guyana; “(iii) accordingly, increase corporate tax revenues; (iv) increase tax compliance by encouraging high-income earners to pay their full contributions; (v) increase the collection of VAT as consumers spend more on goods and services; and (vi) create a sense of shared prosperity and shared destiny. Such a proposal prompts several questions. First is the question of cost and affordability.
“Let us emphasize that this tax measure has the potential of paying for itself financially and economically in quick time through increased VAT, higher personal income tax compliance, higher corporate tax payments, and a larger non-oil economy. But even were we to adopt the PPP’s myopic and disdainful mindset of seeing such measures as ordinary people ‘eating out the money in the budget’… the tax measure is affordable. We base our estimate on the fact that the government received $74 billion in 2023 in personal income taxes. Our tax-free threshold and tax allowance of $400,000/mth would initially cost around $40 billion to $50 billion yearly – a total that would be under 4% of government expenditure. In oil-rich Guyana, cost and affordability are within our reach.”
The statement said this would “depend on: (i) a redistribution of spending within the national budget, (ii) savings from reducing financial mismanagement and corruption, (iii) increased oil revenues from higher profit oil, (iv) higher interests from the NRF, especially as its investment arm kicks in, and (v) increased income from a larger non-oil economy.”
Back in 2022, the APNU+AFC lodged a motion in the National Assembly calling on the government to promptly devise a strategy to address the high cost of living burden for locals and make provisions so that “each Guyanese above the age of 18 years be paid a quarterly cash grant of $200,000.00, which will compensate for the increase in the cost of living”.
