President Donald Ramotar on Thursday said the Committee that was set up in late 2011 to review Guyana’s tax system is in the process of concluding its work.

The Committee has been working closely with experts from an overseas university, Ramotar told a news conference at his office. The Head of State said the work of this body will advise the Government on the way forward with regards to the tax system. “Tax is the lifeblood of government revenue, so it has to be handled very carefully and not in a piecemeal manner,” he said.

Shortly after his inauguration, President Ramotar initiated the three-man Committee comprising former Guyana Power and Light Chairman Ronald Ali, Banks DIH Chairman Clifford Reis, and Economist, Dr Cyril Solomon. It is the mandate of the Committee to complete a comprehensive tax review, but a report which has the power to transform the country’s economic landscape is still pending.

Reducing tax burden

The “Ramotar Committee” is not the first attempt by the Government to overhaul the tax system. Back in 2009, the Government, through the Guyana Threshold Implementation Project, undertook a comprehensive tax review covering almost all tax areas.

The review examined the implementation of the tax system and suggested recommendations for improvements. It was in keeping with this project that the Tax Reform Committee was established with the task of examining the reports and making recommendations on behalf of the Government.

The principal aim of the review was to identify and recommend for consideration measures to bring Guyana’s tax rates in line with other countries and simultaneously support growth by attracting investment, while substantially broadening the tax base so as to reduce the burden, especially on low income and vulnerable groups.

Shortly before the presentation of the budget, Georgetown Chamber of Commerce and Industry (GCCI) President Clinton Urling told Guyana Times in an interview: “We were excited and we were elated when the Government made the announcement that this Committee would have investigated the taxes, but our disappointment comes when two years later, we don’t have direct information or reports emanating from that Committee,” Urling said.

Nevertheless, the GCCI remains optimistic that a comprehensive holistic tax code review will be submitted, benefiting all tiers of society. Finance Minister, Dr Ashni Singh, in presenting last year’s National Budget, had proposed a reduction in the rate of Income Tax from 33.3 per cent to 30 per cent; a request which was approved by the National Assembly under Section 36 of the Income Tax Act.

But Urling argued that this was not enough, contending that the matter can no longer be dealt with in a piecemeal, fragmented and sporadic manner.

Over the years, some stakeholders, including Opposition political parties, have called for the reduction of Value Added Tax (VAT), which stands at 16 per cent, but according to the GCCI President, such a move would have serious implications.

“If we just reduce VAT without considering the other taxes, there will a major short fall in revenues. How would the country recoup the losses?”

Rather than reducing VAT, Urling believes that there should be a further reduction in the Income Tax threshold, in addition to Corporation Tax.

“Reduced income taxes and corporate taxes… could result in consumers having a higher disposable income… if we could drop income taxes from the current 30 per cent to 15-10 per cent, it means the average worker would take home more money.”