Budget 2017 provides measures to ease financial burden – Minister Sharma
GINA, GUYANA, Thursday, December 8, 2016
The proposed changes to the Value Added Tax (VAT) regime in Budget 2017 are based on careful consideration, and are evidenced-based, Minister within the Ministry of Finance, Jaipaul Sharma said.
Speaking in support of the 2017 national budget in the National Assembly on Wednesday, Minister Sharma pointed out that the opposition is creating “un-necessary grief” over the taxation measures.
Minister Sharma said the “doom and gloom” being spread by the opposition on the VAT regime is to deflect from the fact that the previous administration left “a large unpaid refund of input VAT as far back as 2010.”
The government is now left to pay $3.7B in VAT refund debt, Minister Sharma pointed out. “Budget 2017 represents a net VAT which resulted in a larger than usual variance when you try to compare 2016 to 2017 projected VAT collection and the opposition is claiming that this increase is because of the VAT that will be now imposed,” Minister Sharma explained.
The Minister also clarified with statistics the decision to add tax to water and electricity. According to Minister Sharma, recent analysis of the Guyana Water Incorporated (GWI) November 2016 database showed that of the 182,609 customers, 155,011 or 85 percent pay below $1500 per month. “Based on the data from GWI, the average monthly water bill for a household of four is $731,” Minister Sharma told the National Assembly.
In relation to electricity, analysis of the Guyana Power and Light (GPL) September 2016 database found that out of the 135,875 post-paid customers, 108,827 or 80 percent are below $10,000 per month. For the pre-paid customers out of the 29,000 customers who purchase tokens monthly, 27,222 of those customers are below $10,000 per month and therefore will not attract VAT.
Budget 2017 proposes the reduction of VAT from 16 percent to 14 percent and the addition of the new VAT rate to water consumption exceeding $1,500 per month and electricity consumption exceeding $10,000 per month. The budget also proposes an increase in the VAT threshold from $10M to $15M, expansion of the list of VAT exempted items while eliminating zero-rated items.
Meannwhile, Opposition Chief Whip Gail Teixeira in calling for the withdrawal of budget 2017, described it as an “anti-people, anti-development” budget by an “I don’t care” government. Teixeira questioned how the current government found over $600B for three budgets if the previous administration had left the economy in a bad state.
Minister Sharma countered that it was prudent administration by the coalition government. “We got all the money from the prudent administration and stringent tax collection and control of expenditure. They didn’t have any money in the consolidated fund. It was the revenue collection and the way we collected the money and accounted for it, giving us the money to put these largest budgets ever,” Minister Sharma calmly stated.
Responding to Teixeira’s accusation of the government not caring for its citizens, Minister Sharma pointed out, “I don’t know how a ‘don’t care government’ could give $32B to GuySuCo.”
Minister Sharma added that there was full consultation in the preparation of the budget. “Each of the ministers here accompanied the various permanent secretaries and REO and defended their own budget.” The Minister was refuting claims by the opposition Chief Whip that the budget was created “shrouded in the secrecy and the cloak of Cabinet”.
Teixeira also highlighted that several organisations and persons were opposed to the budget. However, Minister Sharma countered, “From all accounts budget 2017 has raised the spirits of the majority of the Guyanese in this festive season with the exception of a small disgruntled minority.”
Sharma noted that the early budget was to “facilitate the effective implementation of government policies and the timely delivery of government projects and programmes immediately in the new year in order to deliver the good life”.
By Tiffny Rhodius