May 06, 2015 News
“The criteria government uses to grant tax breaks is very clear and known to all by now. You have to be either a family member or relative, a close friend, known for lending support to the PPP/C and /or willing to stoop to any level to carry out their corrupt bidding”
The Financial point man of the A Partnership for National Unity (APNU) Carl Greenidge, is outraged at the recent “sweetheart deal” between government and a local contractor.
The deal sees Dax Contracting Services receiving billions of dollars worth in tax concessions, holidays, remissions and waivers for the rehabilitation of the Brazil to Guyana fibre optic cable. This is not the only contract of this nature between government and certain persons who are closely linked to it.
Greenidge said that this “illegal” arrangement” is the “last straw” for the electorate.
In fact, he said that the “Dax Deal” is just another prime example of the “ad hoc” manner in which government grants tax concessions. He said that such behaviour strays far from what the tax laws stipulate.
According to the Fiscal Incentives Institutional Framework for Investment, incentives are supposed to be granted in such a manner that it fosters and promotes a suitable investment climate for both local and foreign investors.
The document says that Government’s commitment to investment is also set out in the Investment Act (No. 1 of 2004), which was crafted -”….to stimulate the socio economic development of Guyana, and to attract and facilitate investment.”
In his interview with Kaieteur News yesterday, the APNU Executive Member expressed, that tax concessions are supposed to be granted in a transparent manner and one that promotes the adherence to international best practices regarding investment.
He stressed that based on how government operates, as is evident in the case with its recent “Dax Deal”, favoritism plays out when giving out tax breaks and holidays to entrepreneurs. “It is obvious that such behaviour defeats the purpose for which tax concessions are to be granted. How government grants these tax holidays obviously leads to the death of certain companies. It creates unfair competition,” the former Finance Minister added.
While the granting of the tax concessions is at the discretion of the Minister of Finance , Dr. Ashni Singh, Greenidge opined that the magnitude of certain tax breaks gives the clear impression that “Dr. Singh lacks a conscience, and / or is acting under the influence of former President Bharrat Jagdeo.”
The tax laws also state that government should not discriminate against types of investments, investors (local or foreign), or types of ventures (company, joint venture, partnerships or sole trading) so long as the investment is sound and duly effected by a legally constituted body/person.
Greenidge said that this principle is totally thrown out of the window, as some contracts which attract certain tax concessions clearly show that government discriminates when it comes to investments.
The APNU Executive Member reminded of the billions of dollars worth in tax breaks, holidays and concessions granted to the Marriott Hotel. He then pointed to the details of the recent contract between the government and Dax Contracting Services which is owned by Faisal Mohamed.
Under the agreement, Dax will undertake the repair and maintain the fibre optic cable from Brazil. This contract is for an initial 25 years with an option to renew it for a further 15 years. This gives Dax a total of 40 years of cable rights.
Government has also undertaken to provide Mohamed with the necessary support to receive and transmit data by way of the cable after granting the company an operating licence. And for free, Mohamed will be able to use the Government-owned fibre optic cables and structures including, roads, the poles, access to repeater stations and other things.
Dax Contracting Services would also be provided with tax exemptions and incentives, including but not limited to tax holidays, remissions, tax waivers and duty free concessions on equipment, spares, tools and vehicles.
The government insists that it will retain possession and use of most of the bandwidth, as agreed to between Dax and the government.
As the owner of parts of the cable, Mohamed can invite and sign with any company or entity to use them to transmit and receive data and information from any part of the world in the same way that today’s telephone companies operate. To add insult to injury, the government has agreed to pay Dax for specific emergency maintenance.
What is even more alarming is that with all the concessions granted to Dax, there is no mention of a penalty clause, a termination clause anything in relation to insurance. These are all basic features of any legal contract. Since the government is often claiming that there is no discrimination in the dispensation of tax concessions between local and foreign investors or businesses, Greenidge is now challenging the People’s Progressive Party/ Civic (PPP/C) to say which entity or person without links to it, was privileged enough to benefit from a “sweetheart deal” like the ones given to the Marriott Hotel and Dax Engineering.
“Government would be unable to do this because it is only concerned about increasing the ill-gotten wealth of its families and friends. This dying administration cannot deny that it is guilty of granting these concessions in an ad hoc fashion. It ignores the fair and equitable manner it is supposed to be distributed.
And Ashni knows very well why he has deliberately failed to monitor all the concessions granted, for if a trail were really to be documented it would lead all the way to Jagdeo. The criteria government uses to grant tax breaks is very clear and known to all by now. You have to be either: a family member or relative, a close friend, known for lending support to the PPP/C and /or willing to stoop to any level to carry out their corrupt bidding,” Greenidge concluded.
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