Why Guyana needs tax reforms

first_imgDear Editor,President Granger did not mention the phrase (tax reform) once in his “2015 manifesto” message, while his Prime Ministerial Candidate stated that his team “proposes to restructure the tax recovery system, not to oppress the wage earner, but to catch the tax dodger”. But after some two and a half years, although the Government’s Tax Reform Committee made sweeping recommendations, tax reform appears to have been relegated to the back burners.I want to focus on one particular set of tax measures against the backdrop of the Guyana Business Summit 2017; I speak specifically of Corporation Tax (CTAX). According to the Ram and McRae website, there are three rates of CTAX in Guyana – a 30 per cent rate that applies to non-commercial companies, a 40 per cent rate that applies to commercial companies except telephone companies, and finally a 45 per cent rate for the telephone companies.If one just observes the CTAX rates in Trinidad as an example, they have a basic rate of 25 per cent and a band of 35 per cent that is applied to the oil and gas industry.  If you are a company in Guyana, and you have a legal choice, which country would you prefer to pay your taxes? Guyana at 35 per cent/40 per cent or Trinidad at 25 per cent/35 per cent!This situation has opened a door to a practice called transfer pricing that allows companies to avoid paying their fair share of taxes in Guyana legally.  It is called tax avoidance. In reality, the tax burden is exported from Guyana to another country with a lower tax rate, allowing that company to bypass the Guyana Treasury. In reality, there is such a company called Guyana Stockfeeds (Trinidad) Ltd which is a subsidiary of Guyana Stockfeeds Inc (Read the Annual Report).The solution to increasing the CTAX payment to the Guyana Treasury is simple – reform the tax system. But it requires a phased reduction of the CTAX rates. A strategic starting point is a reduction of the rate from 35 per cent to 25 per cent for the non-commercial companies (mainly the dwindling manufacturing sector). That one concession will make a world of difference to the investment landscape.I disagree with the Minister’s excuse that tax reforms will have adverse budgetary consequences. It has been empirically proven in many instances that any reduction of the CTAX will directly enhance the investment climate, generate new jobs and new tax payments. Reduction in the rate of taxes is a flow, not a spot transaction and thus to quantify the impact of the tax reform, one must quantify the cost-benefits over a period of time (let us say a year) and this is what the Minister has refused to do.  Rather he is focused on the spot position and his “book losses” at a particular date.  But that is a “bean-counting” mentality.Any reduction in the CTAX will result in the freeing-up of hundreds of millions of new dollars for new investments.The ideal principle of taxation is “broaden the base and lower the tax rates”. The principle goal of tax reform is to promote economic well-being and drive aggregate demand – new investments, enhanced productivity and a living wage.  Instead, Finance Minister Winston Jordan continues to delay the implementation of the recommended tax reforms that even Statia advised (he sat on the Tax Reform Commission).It is time for the Minister to wake up and cut through the fog and if he does not understand the core concepts, why isn’t he buying expertise to help him.  For how long more can Guyana bear a Minister in training behind the 8-ball?At this stage of the game, we should not be discussing the reduction of the CTAX rate for the Private Sector; it should have been a well-advanced process already reaping the benefits from the increased investments, augmented productivity and expanded wages for the workers which would have all been feeding into the expansion in aggregate demand and by extension the economy.Sincerely,Sase Singhlast_img read more

The Press Pass – Sunday, December 27

first_imgNeil Ashton was joined by Tony Evans and Richard Lewis to cast their eye over the festive weekend’s main sporting stories.Among topics up for discussion were Louis van Gaal’s Manchester United future, Jose Mourinho to England and much more.last_img

Barca predicted XI to face Liverpool as former friends seek to wreak havoc

first_imgBarcelona welcome Liverpool to Camp Nou fresh off their LaLiga title success at the weekend.You can listen to live commentary of the Champions League semi-final first leg from Spain, live at 8pm on Wednesday on talkSPORT. 3 Coutinho scored a stunner in the previous round against Manchester United Here’s how Barca could line up on Wednesday, with a front three to terrify any defence in Europe.With Roberto Firmino expected to return for the visitors, Gerard Pique will be expecting a through examination.Tune into talkSPORT to hear how it plays out. 3 Luis Suarez is expected to lead the line against Liverpool It is likely the Reds will be pitted against two former heroes in Catalonia who will be hoping to wreck their European dreams.Luis Suarez and Philippe Coutinho left for pastures new in Spain after falling short in their pursuit of silverware at Anfield.However, Jurgen Klopp’s side are unbeaten in 19 games and can end Barca’s hopes of securing a famous treble.Suarez has already promised to celebrate if he scores against his former side. TEAM NEWSThe only absentee for Ernertso Valverde is Rafinha, with the Brazil international struggling with a knee problem.That means the blaugrana have a full side to choose from, including Lionel Messi, who has scored 24 goals against Premier League teams in the past decade.PREDICTED STARTING XI 3last_img read more