Introduction of VAT was difficult

Finance Minister, Dr Ashni Singh

… but it helped reduce other taxes – Finance Minister

Finance Minister, Dr Ashni Singh said that the introduction of the controversial Value Added Tax was a difficult choice the People’s Progressive Party/ Civic (PPP/C) Administration had to make, but he insisted that running a Government was not only about doing what was popular but safeguarding the future of the country.

The rate of VAT has divided the country with the combined Opposition from the inception attacking the tax as being too harsh and burdensome on the populace. They, at one time, had called for the scrapping of the tax, but of recent have been urging a radical review of it, which includes slashing it to around eight per cent. Speaking on the television programme “Political Scope” on the National Communications Network (NCN) on Wednesday, the Minister said that today, VAT has not only contributed significantly to Government revenue, but has also allowed for a reduction in other taxes, such as the income and corporate taxes. He stated that over the past six years, the income tax threshold has more than doubled.

Meanwhile, defending the PPP/C’s run in office, Dr Singh said that from a state of being internationally discredited, bankrupt and infrastructurally-dilapidated just over two decades ago, Guyana today has transformed with brighter prospects than ever before in its history.

According to the Finance Minister, this was a herculean task which the PPP/C Administration undertook imperviously over the past 22 years in office.

Mismanagement

He mentioned that every sector of the economy had declined dramatically.

“The imposition of a programme of mass nationalisation of industries saw foreign investors having their assets expropriated and forced out of Guyana. The financial struggles created by poor economic policies were compounded by mismanagement of public funds. It’s one thing to nationalise, but to nationalise and mismanage is worse. The environment was so unfavourable to investment that the domestic entrepreneurial class left, because they could not survive in the environment of PNC misrule,” Minister Singh recalled.

He told NCN that by the time the PPP/C assumed office in 1992, the country was bankrupt.

“There were no foreign reserves and an accumulated foreign debt of over US$2 billion and nothing to show for it. Many institutions of state were non-functional and Guyanese citizens were extremely despondent,” Minister Singh said, referencing a report commissioned in 1990 by the Caribbean Council of Churches in which the state of despair and hopelessness among the populace was prominently mentioned.

Shifted priorities

He said that with the restoration of democracy in 1992 came the reinstatement of hope and credibility in the country as well. “I believe that much has been achieved.

Today, institutions are largely rebuilt, democracy is alive and well, we have a free press, a vibrant Parliament, a well-functioning and resourced elections commission, and a judiciary that is highly modernised and independent,” the Finance Minister said.

According to him while the PNC invested more on foreign services and the Office of the President than the social sector, the new Administration shifted its expenditure priorities to invest more in infrastructure and human capital.

He explained that more focus was placed on ensuring that the basic needs of the people, like access to primary education, primary health-care services and housing, were met. “We, first of all, relooked at expenditure priorities to invest in things that matter. Today every single young employed person can realistically aspire to own their own home.

We looked at establishing a legislative environment that would be conducive to private enterprise development. We removed all controls over the economy, and put in place a strong financial sector,” the Finance Minister outlined. These efforts resulted in rebuilt infrastructure and a return of investors, since the country was no longer viewed as a pariah state.