A Partnership for National Unity plus Alliance For Change (APNU+AFC) has been highlighting the “ad hoc” manner in which Government seems to be handing out tax concessions and tax holidays to foreign investors and local businessmen.
These criticisms were made before but are on the frontburner again given the recent deal struck between Government and a local contractor. That contract signed by Cabinet Secretary, Dr. Roger Luncheon and Faisal Mohamed of Dax Contracting Services sees the latter party receiving billions of dollars worth in concessions.
Apart from the magnitude of the tax concessions granted, what is a serious matter of concern to the opposition is the fact that the contract says nothing about penalties to be effected if Dax does not follow through with the obligations of the arrangement to repair and maintain the Brazil to Guyana fibre optic cable. The contract lacks a termination clause and even a time for completion.
The opposition has also highlighted the controversial Marriott Hotel which has been the recipient of extravagant tax holidays and tax breaks similar to Dax.
Given the aforementioned “concession-trend”, the party has concluded that the People’s Progressive Party/ Civic (PPP/C) grants concessions in three packages: Gold, Silver and Bronze.
One of APNU+AFC’s financial advisors, Jaipaul Sharma, said, “The gold package is the first-class tax concessions that Government grants through the Finance Minister, Dr. Ashni Singh to its family and best friends.
“The silver package is for party members and the bronze package represents the tax concessions
that are given to its supporters.”
Sharma, an accountant, said that he is disgusted at the manner in which Government discriminates when it comes to investments.
He added, “The thing that is most despicable about this administration is that in no sector or no area can you find it operating with an ounce of decency or transparency and accountability.
“With these enormous concessions they are granting to their friends, family and favourites, it is clear that Government wants to control the market.
“They want to control the very bread on our table and who we get it from. And the sickening thing is that they enjoy watching the poor bleed just to make ends meet in this country. This PPP/C administration has a sick and twisted mindset for development.
“Everything they do is to accelerate growth for themselves. So when Ashni Singh talks about Guyana’s economy growing, that is not true, it is their pockets that they are referring to.”
Chartered Accountant, Christopher Ram, said that should the APNU+AFC assume office, it would be wise for it to look at a few things relating to tax concessions.
Ram said that the discretion given to the Finance Minister to be the final check point for the approval of concessions needs to be reviewed.
He said that the secretive manner in which tax concessions are treated need to be rejected immediately. The new government should deal with it in an open manner, forthwith.
“The decisions to grant tax concessions should not be left to the Finance Minister alone. We should have some strict rules regarding concessions and tax holidays and those should be incorporated into the law.
“The regulations need to provide for a strict review process and failure from certain companies to meet the relevant terms and conditions attached to the tax breaks should lead to automatic suspension and or revocation of the tax concessions granted to them by the Ministry of Finance,” Ram added.
APNU’s financial point man, Carl Greenidge, had also taken a jab at the Dax deal and the PPP/C’s “carefree” granting of concessions to persons with close ties to it.
Greenidge said that the “Dax Deal” is just another prime example of how the current administration 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 they foster and promote 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.”
The APNU Executive Member said 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”, favouritism 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.
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) as long as the investment is sound and duly effected by a legally constituted body/person.
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.
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.
“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.”
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 said.
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