Bill to simplify interest rate passed
GINA, Guyana, Saturday, January 7, 2017
The National Assembly passed the Financial Administration and Audit (Amendment) Bill late Friday evening, which will see a fixed interest rate being applied by the Guyana Revenue Authority (GRA).
The Financial Administration and Audit (Amendment) Act 2016 provides for a simple interest rate of 18 percent per annum, instead of the current Bank of Guyana market published market rate.
The passage of the Bill saw the amendment to the Financial Administration and Audit Act Chapter 73:01 by the repeal of two sections:
- Section 6B (2) which states: “the Commissioner General shall specify quarterly by public notice the rate of interest applicable to tax arrears using the average market rate of interests for the preceding quarter.”
- Section 6B (3) which states: “for the purpose of this section market rate of interest means the prime lending rate as published by the Bank of Guyana plus 500 basis points.”
The re-enacted Act follows:
- The rate of interest applicable to late payments referred to in Section 6B (1) shall be 18 percent simple interest per annum
Finance Minister Winton Jordan in commending the Bill for passage in the House, pointed out that the repealed sections have resulted in “complex and problematic computations” by the staff of the GRA to arrive at the correct applicable interest and payment thereafter derived.
“The numerous complex computations required because of the constantly changing interest rates has given rise to, in many cases, incorrect results for some tax types when using the GRA TRIPS system (Total Revenue Integrated Processing system),” Minister Jordan said.
Additionally, the repealed Sections often posed difficulties in the manual preparation and calculation of rates. The simplification of the interest rate not only makes for easy computation, but improves administration and increases compliances Minister Jordan reasoned.
“This simple act of moving to a simplified unitary interest rate will have a number of benefits for all: easier computation, easy administration of late payment, more compliance, (and) more revenue from interest hopefully and of course more accuracy in the calculation of interest on arrears.
However, the Opposition raised its concerns about the perceptions of confidence in the Bank of Guyana and non-existence of the law being amended. Opposition Member of Parliament (MP) Irfaan Ali, contended the amendment questions the dependence of government and its reliance or the lack there of on the Central Bank and fiscal management, Ali argued.
Further, the amendment has implications on the economy and how the Central Bank is viewed Ali said. Ali asked the Minister to justify the rate being set and to reconsider the GRA setting the rate. Instead Ali recommended sticking to the Central Bank rates.
Minister Jordan in response to Ali’s argument explained that the rate of 18 percent was set following the examination of trends in the development of the Bank of Guyana’s rates dating back to 2004 which could be higher than the fixed rate now set.
Addressing the perception of lack of confidence in the Central Bank, Minister Jordan said the amendment does not mean a lack of confidence in the Central Bank rather, “in reality what we’re suggesting is that since that rate moves ever so often…we are shortening and simplifying things by utilising a flat rate.”
Meanwhile, Opposition MP, Anil Nandlall argued that this Financial Administration and Audit Act is not part of the laws of Guyana. “We are seeking to amend a law that does not seem to exist,” Nandlall said.
Minister Jordan in response to Nandlall, noted that the volumes that were cited by him (Nandlall) were longer in use. “It is this volume that corrupted the laws of the country at great expense,” Jordan pointed out. Nandlall was citing the Law Revision Order of 2012 which he contends has the Audit Act listed under Chapter 73:01.
“Section 6B which is still in existence by virtue of Act no 14 of 2004 is what we are seeking to amend today,” Jordan explained. The Fiscal Management and Accountability Amendment Act 2004 was the Act being cited by Minister Jordan.
At the consideration of the Bill in Select Committee, the amended clauses were passed without objection from the Opposition. The Bill was read for the third time and passed as printed without objection from the Opposition.
By Tiffny Rhodius