Dec 04, 2016 News
By Kiana Wilburg
After one week of preparation, the political Opposition says that it is all set and ready to
“tear budget 2017 to pieces.”
The debates, which will last for a period of five days, kick off tomorrow. Each day, the debate will start at 10am and conclude at 10pm.
Monday’s session is expected to facilitate 16 speakers. From the Opposition camp, the speakers slated to make contributions to the debate include former Housing Minister, Irfaan Ali, Joe Hamilton, Zulfikar Mustapha, Sheila Veersammy, Yvonne Pearson, Adrian Anamayah, Gillian Burton-Persaud and Harry Gill.
Representing the Government will be Minister of Business, Dominic Gaskin; Parliamentarian Michael Carrington, Charrandas Persaud, Valerie Garrido-Lowe, Richard Allen, Keith Scott, Audwyn Rutherford and Gloria Brancroft.
Starting the debate tomorrow will be Irfaan Ali.
Speaking with Kaieteur News yesterday, the confident Parliamentarian asserted that the Opposition is prepared to expose the Government on its “hocus pocus budget.”
The Parliamentarian said that during his presentation, he will discuss a number of issues such as the projected 2.6 % growth rate for 2016, the Guyana Sugar Corporation (GuySuCo), non-performing loans, debt management by the state and the measures regarding Value Added Tax (VAT).
Ali said that he intends to “school” the Finance Minister on why his proposed tax measures, especially
the move to add 14 percent VAT on water and electricity; two fundamental human rights, clearly doesn’t follow the design of an optimal tax system.
Ali recalled that Finance Minister, Winston Jordan in his 2017 budget speech, announced that Value Added Tax (VAT) would be reduced from 16 percent to 14 percent.
Jordan also proposed to introduce next year, a VAT of 14 percent on electricity consumption in excess of $10,000 per month. For the avoidance of doubt, he said that the $10,000 limit is not an allowance.
Jordan said that VAT will be applied to the full amount once consumption exceeds $10,000.
The Finance Minister also proposed to introduce a VAT of 14 percent on water use in excess of $1,500 per month. In this case as well, he stated that the $1,500 limit is not an allowance. Jordan said that it will be applied to the full amount once utilization exceeds $1,500.
Ali said that the proposed tax adjustments are so “regressive and highly convoluted, that even Finance Minister, Winston Jordan; himself seems too inept to correctly comprehend how the adjustments will work and have serious ripple effects on the economy.”
He opined that VAT on water will cost the citizenry approximately $110 million, given that approximately 9,000 persons, on average that pay $1,500 or more per month on water charges.
With respect to electricity, Ali said that this policy will add significant hardship to the lives of the people.
“Not only will production costs skyrocket, inflation will increase significantly, eroding the purchasing power of our currency while distorting consumption pattern. The burden will depend on the elasticity of demand.
However, in either case, overall level of utility will reduce while deadweight loss will increase significantly,” expressed the Parliamentarian.
He said that he intends to elaborate further and prove his case in this regard tomorrow.
The Opposition Member is also adamant that the ripple effects that will follow because of Jordan’s proposed tax measures on utility bills will lead to reduction in private consumption and ultimately an increase in non-performing loans.
Additionally, Opposition Leader, Bharrat Jagdeo has made it pellucid that he intends to take the Finance Minister to task on his 2017 budget. He will also refer to those of 2015 and 2016.
“The last two budgets did not have the impact promised on transforming the economy and I intend to take the Finance Minister, Winston Jordan to task in this regard.”
Jagdeo said that he had given much consideration to the impact of the Government’s first two budgets on the economy.
The former Finance Minister has since concluded that those budgets and their measures were simply not enough to have an impact of consequence much less sustain economic growth.
The Opposition Leader noted that all budgets should have some amount of impact on the economy. When it comes to the 2015 and 2016 budgets, the point for him is whether both have fulfilled their expectations.
“So in my view, the measures in both budgets were not sufficient to maintain growth in the economy and to keep generating wealth for people. And even where resources were budgeted to have some impact on employment and expansion of public welfare through public infrastructure, it did not, because of the low rate of implementation,” Jagdeo noted.
He said that overall, the budgets “were deficient and measures in both were not fully implemented”.
Jagdeo in the same breath acknowledged that the budgets had an impact, as all budgets do. “Whether they rise to the potential of making some significant impact or impact of consequence, I would say no.”
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