Jagdeo denounces gov’t on taxation, spending choices
-hammers gov’t on spending choices
Opposition Leader Bharrat Jagdeo yesterday laced into government’s proposed 2017 budget, charging that it shows no vision for investments and job creation and places an enormous tax burden on Guyana’s citizenry.
“This budget is about no jobs, no investments, bigger government financed local borrowing, more taxes and increased cost of living,” Jagdeo railed, as he delivered an almost two-hour analysis in the National Assembly yesterday as he closed the debate for the opposition.
Jagdeo contended that there is no evidence to show expansion of wealth for the populace or sound welfare policies. He accused the government of laying more burdens on the Guyanese population by way of taxes as the only way to develop the country.
“How can they say that they are attracting foreign investment when you only have at $8.5 [B] in 2017 coming from foreign direct investments? How can this happen. It says here that increasingly the investments in Guyana are being financed by domestic savings not foreign inflows. So what happens is after a while, that runs out and then reflects itself in a change in reserves or a deteriorating balance of payment position and exchange rate that will tank. This will put the pressure on the exchange rate in the future. Don’t worry about Trinidadians buying (US)$5M here in the market. This is it (and) it is very very dangerous. Many times we talk about other things and these go unnoticed,” he added.
Looking at the estimates of this year’s budget, Jagdeo said from analysis of Table one in the estimates, central government’s consolidated fund, which was $60.6B in 2015 will grow to $123B in deficit in 2017. “From ($)60B to ($)123B…the minister makes no secret ... he has indicated that they are going to borrow more, they are going to spend more and from the local markets. Look at the monetary survey, you will see that the growth will go over 30%,” he added.
Jagdeo argued that the government is outstripping the private sector in borrowing from the banking system. It has run down all the positive balances in the banks. It is very, very dangerous. The government is taking a bigger share in the banks to finance its deficit.
A former finance minister, Jagdeo pleaded with government to listen to the cries of its people. Using the country’s poultry producers as an example, he noted that they have said that budget measures will see an increase in the price of the commodity by a staggering 22%.
And pointing to monies that will be brought in from the Value Added Tax (VAT) this year, Jagdeo accused government of being “disingenuous” when it lowered the tax from 16% to 14% but increased other taxes.
“The VAT, it goes from $35.9B in 2016 and in 2017 it will be $45.1B that is a $9B increase in VAT collection. The minister said this is not revenue neutrality he is collecting more money from VAT. When you go to the nation and you say ‘I will decrease the VAT from 16% to 14%, you are telling people you are relieving their tax burden. They don’t care the rate. They care about the burden. We have this obsession for rates but what they have done is increased the tax burden by $9.2B. This represents a 25.6% increase in VAT …in the collection of VAT. The new taxes are bringing in $13.7B more Mr. Speaker. That is a 38% increase,” he said to laments from his party’s members.
“We hear about three budgets in nineteen months and I see this as an indecent haste to the taxpayers not as an achievement. Why did they bring an early budget? …It comes back to taxes. If you had passed the budget in April of next year, many of these taxes could not have been applied so they wanted to pass it this year so they can start applying for tax from January. There is a motive here, Mr. Speaker, the motive is taxing people more and collecting from them,” Jagdeo also said, while pointing out that he believes that many of the numbers being assessed will change over the next few months.
Alliance For Change Leader and Minister of Public Security Khemraj Ramjattan was one of a handful of government ministers who stayed in the chamber for the duration of Jagdeo’s presentation and seemed to pay key attention to his every word. During the opposition leader’s presentation, Ramjattan responded directly to Jadgeo on those issues he felt he was not accurate on. Such was the case when Jagdeo spoke on the revenue that will be raked in from VAT.
“This VAT is going to collect much more than anticipated and you heard the Honourable Member Mr. Ramjattan say that I don’t like it and he is right. I don’t like it because it is coming from ordinary