…appeals for other incentives during 2019 budget consultations
In the absence of affordable energy, the Guyana Manufacturing and Services Association (GMSA) is appealing to the Government to remove excise tax on fuel. The Association is of the view that this measure, along with others, will help to reinvigorate the manufacturing sector.
The call to remove excise tax was put to Finance Minister, Winston Jordan, yesterday. He was at the time, engaging a team from GMSA on the 2019 budget.
The team from GMSA included its President, Shyam Nokta; Vice Presidents Ramsay Ali; Ramesh Dookhoo; and Glennis Hodge, along with several Executive Members. The parties exchanged thoughts on the worrying state of the sector, tax measures which are doing more harm than good, and the measures needed to spur growth.
During that engagement, the Association expressed concern about the declining performance of the sector.
GMSA officials reminded that the Ministry of Finance Mid Year Report for 2018 reveals that the manufacturing sector contracted by 2.4% primarily due to a decline in the production of sugar and rice. It also expressed concern that light manufacturing recorded slower growth compared to last year, 1.2% as compared to 3 %.
It also noted that while there has been growth in the forestry sub-sector, mainly driven by the production of logs and round wood, the export of timber is now slowing down. GMSA highlighted that for much of the year, this sector has been plagued by the deplorable condition of hinterland roads, which has been compounded by poor weather.
It said, too, that the state of interior roads has also affected the supply of goods by manufacturers to hinterland areas.
The Association made it clear to the Finance Minister that there are certain tax measures, which are not serving the interest of the manufacturing sector. In this regard, GMSA emphasized that tax measures introduced in Budget 2017 such as VAT on electricity continue to impact negatively on the manufacturing sector.
Additionally, it said that adjustments to the VAT Act in 2018 where several items were re-categorized from Zero Rated to Exempt has affected the ability of manufacturers to reclaim VAT on inputs made for items for export.
GMSA said that among the sectors, which have been severely affected are wood processing and rice exports.
GMSA also pointed out that the steady decline in the sugar sector is cause for concern not only for its national impact but also the dependence of light manufacturing for inputs from the sugar industry – specifically molasses.
In the interest of igniting long-term growth of the manufacturing sector, GMSA called on the Finance Minister to lend consideration to its measures for budget 2019.
GMSA proposed the removal of VAT on electricity; reversal of the policy where items were transferred from Zero Rated to Exempt, especially for items of export from the manufacturing sector; provide incentives to manufacturers utilizing local raw materials in their manufacturing processes; and provide a greater share of public procurement for locally manufactured goods in areas of pharmaceuticals, lumber, aggregate and quarry products, agro-produce and juices, etc.
It also called for the government to reduce tariffs for manufacturing entities based on performance thresholds; provide incentives for renewable energy options such as gasifiers to utilize biomass, e.g. in wood processing and agro-processing; and provide support for packaging and labeling facilities for agro-processors.
The Manufacturing Association also acknowledged that many of the proposed measures are not new and have featured in the Ministerial Roundtable Discussions between the GMSA and the Government of Guyana through the Ministry of Finance.
GMSA said that the measures also form part of the deliberations of the Joint Technical Working Group where focus is on the Forestry and Wood-Processing and Agro-Processing Sectors.
GMSA said it looks forward to favourable consideration of its proposals in Budget 2019.
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