Office of the Leader of the Opposition

Excerpts from Press Conference on Budget 2016 by Hon. Bharrat Jagdeo, MP

The Honourable Bharrat Jagdeo, MP., made the following comments at his Press Coneference today (February 2, 2016): Budget 2016 and the measures detailed by Finance Minister, Winston Jordan, underscored the need for a more sensible approach to be taken towards policy-making, particularly since many of these measures do not see greater benefits being directed to the Guyanese people.

When you do these things, they have to make sense. And in that regard, I am calling on President David Granger and his Finance Minister to make changes to several of the measures announced by Minister Jordan.

1. Reduce the fuel and electricity prices to reflect the true tumble in oil prices on the global world market. A five (5) per cent rebate in electricity charges is a joke and why should it be effective until April 1, 2016? Why wait two months? The announcement by itself has absolutely nothing to do with budget. Will we wait until 2017 if the prices go back up? What we are doing is taking money from ordinary Guyanese people and putting it into the coffers of Government.

2. Change the restriction of the importation of used and/or re-conditioned vehicles to under twelve (12) years old – instead of eight (8) years – from the date of manufacture to the date of importation. This will ensure that persons from the lower middle class and the poor, many of whom purchase vehicles on terms, as well as auto dealers do not suffer the gravity that the announced move will have on their lives and livelihoods.

For example, in speaking to an auto dealer, it was explained that a Toyota Premio costs $2.5M on the local market, and if the new model is to be imported it will cost buyers $3.6M, which is over $1M more than the cost currently.

3. Remove totally or change the restriction of the importation of used and/or re-conditioned heavy duty motorized vehicles, including trucks, canters, etc., to between fifteen (15) and twenty (20) years old – instead of eight (8) years – from the date of manufacture to the date of importation. Many in the construction, mining, rice, forestry and transportation sectors will benefit from such a change.

Currently, a single axel truck costs between $5M and $6M and the new policy will see that cost increased to as much as $18M. The same applies to double axel vehicles with the cost moving from between $9M and $10M to $27M.

4. Withdraw the ban on the importation of used tyres. Instead, expand the staff and strengthen the regulatory capacity of the Guyana National Bureau of Standards (GNBS) to ensure the quality of the used tyres. Justifying the move as an effort to boost road safety is not completely factual, since most of the accidents on our roadways are caused by drunk driving and speeding.

I spoke to one owner of a canter and the cost for a tyre is $16,000. The proposed ban will now see him paying $70,000. Imagine the prices for bigger tyres. The prices will be astronomical. A new tyre will now cost about 50 per cent of the minimum wage, which is $50,000.

5. Farmers and Amerindians should be exempted from the proposed increase in gun licenses fees, since their livelihoods depend on their possession of firearms.

6. Reduce the announced proposed increases in a raft of licenses by 50 per cent. Most of the proposed increases see a jump from between 50 and 700 per cent. The fees to be increased relate to drivers’ licenses, fitness, motorcycles, motor vehicles other that a motorcycle, hire cars, motor busses, good vehicles, articulated vehicles and other vehicles, including motor tractors and trailers and motor hearses. Also included are application fees, licence fees and renewal fees for hotels, off licence areas, liquor restaurants, spirit shops, members clubs, malt and wine and wine bars. There are several others, which will be increased once the laws are changed – over 130.

7. The proposed amendment to the Tax Act to ensure that prior to the issuance of all licenses for public use, the applicant must be compliant with obligations to file annual returns and paid, or has made arrangements to pay all taxes due and payable should be reconsidered.

Instead Government should move in a phased manner by first going after areas where the potential of revenues being recovered are greater. In the meantime, the capacity of the Guyana Revenue Authority should be increased to allow it to be able to respond to the changes being proposed. With government’s proposal, we are looking at an estimate of as much as 70,000 additional persons who will have to access GRA’s service to get certificates of tax compliance. The law currently states that GRA has the jurisdiction over the last seven years. If only 50,000 have never submitted tax returns in the past, they will have to submit now, for the last seven years. That is 350,000 additional tax return documents to be processed. Does GRA have the capacity to handle 70,000 new persons approaching them? Any right thinking person knows that GRA does not have the capacity to do this. It will create bottlenecks for business, greater corruption and I doubt it will significantly impact on increased revenue collection.

8. Withdraw the announced move to introduce a broad-based environmental tax, which will place greater burdens on a great number of Guyanese.

Government has justified to some of these draconian measures as a move to ‘green’ the local economy, in addition to raising additional taxes. We in the PPP/C have always sought to balance the green economy and the Low Carbon Development Strategy (LCDS), with the need to improve people’s lives and not bringing additional burdens on them.

Government is about creating the environment for citizens to do well. The philosophy of the APNU+AFC Government seems different; rather than focus on the productive sectors – we saw no help for rice, sugar, mining, bauxite, fishing and forestry – given that these are the sectors that create wealth, we saw a focus on filling the coffers on Government, on the backs of ordinary Guyanese. The announced measures, related to vehicles, will be a strain on the pockets of ordinary Guyanese in many ways. For example these moves are expected to see an increase in the cost of public transportation, among several other negatives of such an undertaking.

Guyanese will be undeniably hard hit by these measures. What Government is doing is essentially taking wealth from people and putting it into the treasury for Government spending.

If you follow the trail of the measures announced you will find who they favour. The measures are favourable to a few special interests. The trail leads to both individuals and companies, some with real connections to the APNU+AFC government. In this manner, the Guyanese people are not the ones who are being helped. The Government is definitely not helping the poor. This is not how you expand wealth. It is not how you make a country better.

Other issues of concern include: Government’s negotiation of a Wind Power project with an individual who was publicly endorsed as the “personal friend” of a sitting Government Minister; the lack of transparency and procurement reform that makes Government’s actions less transparent, such as increasing limits for awards of public monies that can be made by Ministers, and an increase of spending limits that required a three-quotation compliance, to ensure the lowest price is paid. The slowdown in investments deal secured by GoInvest was also noted, a reduction from $89B in 2015 to $11B in 2016. This shows there is no private sector confidence.

All of these issues and more will be expounded on during the debates on Budget 2016, which begin next Monday.

Tuesday, February 2, 2016