…estimates $1B annual losses as it ditches environmental tax
In keeping with a year-old ruling by the Caribbean Court of Justice (CCJ), Guyana will today stop collecting tax on non-returnable beverage containers, even as it stands to lose $1B annually.
As he presented arguments for an amendment to the Customs Act yesterday, Minister of Finance Winston Jordan told the National Assembly that the billion-dollar loss would have a significant impact on the treasury.
He explained that the time has come for a properly structured environmental tax to be considered, and there should be wide-ranging consultations that would eventually make way for those who pollute to bear the brunt of the burden. The Finance Minister said that the environment is precious and it must be protected for generations to come.
Before, the Customs Act imposed an environmental tax – $10 per each non-returnable container – on companies whose products Guyana imports. The manner in which the law was imposed, however, was met with a challenge by Suriname company, Rudisa Beverages and Juices.
The company had taken Guyana to the CCJ because it felt that the $10 per bottle environmental tax that was being charged when importing its soft drinks (Thrill) to Guyana, was in contravention of the Revised Treaty of Chaguaramas which outlines free trade to signatory countries.
The company had argued that the tax was discriminatory, since local importers did not have to pay it and the CCJ had ruled in Rudisa’s favour, citing that Guyana had to honour its treaty obligations and ordered that the claimants are entitled to repayment.
The People’s Progressive Party/Civic (PPP/C), who governed at the time, had refused to pay the monies owed, but the new government yesterday assured that US$6.2M will be given to the company.
Further, the CCJ ruling had, in fact, forced the hand of the Guyana Government to stop charging the tax on Treaty colleagues, and the amended Bill that Jordan presented looks to repeal a section of the Bill which allows the Guyana Revenue Authority (GRA) to collect the said environmental tax.
The National Assembly yesterday heard that the government recently came to an agreement with the company for the payment of damages awarded by the court since May 2014.
While he said that the CCJ judgment is final and must be respected, Jordan said Guyana had, in its defence, argued that the company shouldn’t be awarded damages, since they had passed on the tax to the citizens of Guyana by increasing the prices of beverages.
According to the Finance Minister, it was an attractive argument which the court acknowledged, but Guyana failed to provide any evidence to substantiate its claims. In terms of the impact paying will have on the Treasury, the Finance Minister said “we would be hard-pressed to do it by a treasury that is burdened by both direct and indirect expenditures.”
Attorney General and Minister of Legal Affairs, Basil Williams said Guyana would cease levying the tax from today (July 31). According to him, Guyana would inform the CCJ during a video-conference hearing today that the damages of US$6.2 million would be paid in full and a final discharge to the Surinamese company.
“Unlike the previous administration, we will pay,” Williams said of the money owed to Rudisa. Guyana has until January 31, 2016, to complete the payment.
Passage of the Bill ensured that Guyana meets the deadline (July 31) for the removal of the tax in keeping with the CCJ judgment.
Also speaking on the issue, Minister of Foreign Affairs, Carl Greenidge said the Bill had attracted a considerable amount of controversy and there were several dimensions that needed to be explained.
He noted that the Customs Act had violated the free movement of goods as provided under the CARICOM Treaty.
The then PPP government, he insisted, knew that it infringed on the Treaty.
“We accept no responsibility for the burden,” Greenidge declared. He said it took the government from 2001 to 2012 to decide it would examine the Bill, despite continuous meetings during that period.
He said the government “took its own time” and in the end hadn’t amended it appropriately.
It is unclear how much money from that tax had been spent on cleaning up the environment over the years.
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