INCOMING Opposition Leader Bharrat Jagdeo has contended that the $221 billion 2015 National Budget is not a true reflection of what the APNU+AFC coalition had promised the people during the elections campaign earlier this year.

Jagdeo expressed this view at a media briefing following the debut budget presentation of Finance Minister Winston Jordan on Monday.

The budget is themed “A fresh approach to a good life in a green economy.”

Examining the contents of the budget, the former President explained that “significant increases” in public servants’ salaries which had been touted during the elections campaign and listed in the coalition’s ‘100 Days Plan’ was not fulfilled.

In fact, he reasoned that recipients of the 6 to 26 per cent increases in salaries for public servants will only receive half of those amounts as those increases will be effective for only six months.

“What bothers me is the date that these increases are effective from. It’s effective from July 1. So you have to divide those figures by 2, [because] it’s only effective for six months in the year. At the end of the day, the public servants are not going to take home 15 per cent who earned $50,000; they are going to take home 7.5 per cent for this year. These are even lower than what the previous Administration gave in the past,” Jagdeo pointed out.

On Monday, Jordan had revealed that there would be an increase in the minimum basic salary of each public servant to $50,000, which translates to a 26.4 per cent increase for those still earning the old minimum wage of $39,540; and there would be a 17.1 per cent increase for over 4,000 public servants earning the current minimum wage of $42,703. Additionally, all other public servants will receive a 5 per cent salary increase.

The increases were announced by the Minister to be effective from July 1, 2015.

NIS

As it relates to the National Insurance Scheme (NIS), Minister Jordan announced an end to the subsidy of 1 percentage point which was paid by the Government to cushion the effects of the increase in NIS rates in 2003. The Minister said the Government is of the view that the time is “opportune” to end this subsidy, given the “substantial increases” in salaries at the lower level, complemented by the removal of NIS contributions from being taxed.

The withdrawal of the NIS subsidy will take effect from September 1, 2015.

Unreceptive of this move, Jagdeo sought to question what the Treasury would be benefiting from the elimination of this subsidy.

“We need to find out from him [Jordan] how much the Treasury will gain from the withdrawal of the subsidy we were giving to NIS payers,” the new Opposition Leader has said, adding that only after that has been established would one be able to determine in a net sense what this measure means — whether the funds from this subsidy are larger than the $1.3B.

“If it is larger, then it means he is not giving anything to NIS payers, he’s taking from them,” he contended.

Pension

As it relates to what was detailed in the 2015 Budget for pensioners, the Minister announced that 42,397 beneficiaries of Old Age Pension will now equally benefit from a monthly pension of $17,000 – a 30 per cent increase on the present amount of $13,125.

Divulging further on additional benefits for senior citizens, the Minister said that discriminatory practices must end. He explained that, currently, only 30 per cent of pensioners benefit from an electricity subsidy, since it requires either proof of ownership of property or registered tenancy of property.

A similar discriminatory practice, Minister Jordan has said, is in the provision of the subsidy for water services. Only 62 per cent of the registered pensioners benefit; More than 16,000 pensioners are excluded.

However, the former President told reporters yesterday that it was not clear whether the subsidy for water and the preferential rate for electricity for pensioners will be withdrawn.

Speculating, however, Jagdeo said that from all indications — which includes the Minister’s remarks that “this [discriminatory practice] must stop”– one can draw a reasonable conclusion that it is so.

But if it is indeed true that the subsidy is being withdrawn, Jagdeo reasoned, this may very well end up putting pensioners in a worse off position than they had been before the budget presentation.

VAT

Value Added Tax (VAT), which was also listed in the coalition’s 100-Day Plan, had also demanded attention during the presentation of the budget.

However, an unexpected announcement of Government’s failure to “immediately implement a phased reduction of VAT” was justified by the Finance Minister.

He explained that, upon assumption to office, the new Government was greeted with a tax system that is “characterised by high tax rates”, resulting in innumerable requests for tax exemptions and concessions, which totalled $55 billion, in 2014; an unacceptable level of tax evasion that is clearly unlawful, discriminatory and stifles competition; widespread discretionary elements which have been used to favour and reward friends rather than encourage development; and low and/or no compliance.

These things notwithstanding, the Minister proposed an amendment to the Value Added Tax Act, 2005 Cap. 81:05 to lengthen the list of commodities that attract no VAT. These include yogurt, cereals, fresh carrots, Milo and Ovaltine, Nestum, mustard and mayonnaise, locally-produced fruit juice, locally-made chowmein, vinegar, locally-made uncooked pasta, ketchup, chicken sausages in packets, locally-produced Chinese sauce, baking powder, liquid detergent, household cleaning agents, rolls of paper towels, liquid detergent, and computer printers for non-commercial use.

But, according to Jagdeo, the Government was reducing VAT on some items to satisfy the reduction of the rate that it had initially promised. It is to this end that he noted that, after examination of some of the items which will now be zero-rated, he can confidently say who some of the lobbyists are who were going to get some items zero-rated.

He said the inconsistency in the items zero-rated suggests that there had been “serious lobbying”.

“On one hand, when you remove Environmental Tax ostensibly because it is discriminatory against regional production, and then you introduce a waiver on VAT for production that competes with regional goods too; if the idea was to stimulate the production of fresh juice, why would you want to waive the VAT on imported carrots?” he asked.

“This has nothing to do with cost of living,” he claimed, alleging that this move by the Administration goes against everything that they had promised in their manifesto.

School Uniform Assistance

Minister Jordan also announced an increase in the value of school uniform vouchers from $1,500 to $2,000. This, he said, would benefit 167,000 students across the country, and it reflects an additional $337 million investment into the programme. But Jagdeo contended that the $10,000 cash grant which was piloted by the PPP when in Government is being slashed, but not to the benefit of the children.

“If we take the $10,000 that we had given as a transport grant and we multiply it by 167,000, we’ll have $1.67 billion. So what they have done is that they have given $337 million and have taken back $1.3 billion from the students,” he said.

Support

Criticisms notwithstanding, Jagdeo told reporters that he supports some aspects of the 2015 Budget. These, he said, include the increases for public servants, the subventions for the Guyana Sugar Corporation (GuySuCo), the monies allocated to pay rice farmers, and the “Green Economy” initiative being pushed by the APNU+AFC Government.

But he said these aspects of the budget would be supported by him and the PPP only once they are funded by “real money”.

By Ravin Singh