-pressing for removal of VAT on electricity
On Tuesday, the Guyana Manufacturing and Services Association (GMSA) called on the government to take strong steps to reverse the slowdown of the manufacturing sector.
A team from the GMSA including its President, Shyam Nokta met with Minister of Finance Winston Jordan as part of engagements on Budget 2019. A release from the GMSA said that Nokta in presenting the organisation’s position paper for Budget 2019 referred to the slowing down of the manufacturing sector. He said that according to the Ministry of Finance Mid Year Report for 2018 the manufacturing sector contracted by 2.4% primarily due to falls in the production of sugar and rice. Light manufacturing also recorded slower growth compared to 2017.
While adverting to the growth in the forestry sub-sector at the half year point of 18.1 % and driven by the production of logs and roundwood, mainly from small operators, the GMSA said that the export of timber is now slowing down. The GMSA also said that for much of the year this sector has been plagued by the deplorable condition of hinterland roads, compounded by poor weather. The state of interior roads has also affected the supply of goods by manufacturers to the hinterland. The GMSA stressed that tax measures introduced in Budget 2017 such as VAT on electricity continue to hamper the manufacturing sector. It also said that adjustments to the VAT Act in 2018 where several items were re-categorised from Zero Rated to Exempt has hampered the ability of manufacturers to reclaim VAT on inputs made for items for export. Among the sectors which have been severely affected are wood processing and rice exports. The GMSA also said 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.
The release from the GMSA said that a comprehensive list of measures were presented by the GMSA covering taxation, energy, public procurement, hinterland road improvement and management, access to finance, and standards and regulations along with sector specific measures covering forestry and wood processing, agro-processing, services and construction and engineering.
The GMSA said that among the measures proposed are removal of VAT on electricity; overturning the policy where items were transferred from Zero Rated to Exempt, especially for items of export from the manufacturing sector and providing incentives to manufacturers utilizing local raw materials in their manufacturing processes
The manufacturers are also proposing providing a greater share of public procurement for locally manufactured goods in areas of pharmaceuticals, lumber, aggregate and quarry products, agro-produce and juices, etc., dropping of the excise tax on fuel used in manufacturing and adjusted/reduced tariffs for manufacturing entities based on performance thresholds.
It also wants incentives for renewable energy options such as gasifiers to utilize biomass, e.g. in wood processing and agro-processing; and support for packaging and labelling facilities for agro-processors.
“The GMSA acknowledges that for 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. They also form part of the deliberations of the Joint Technical Working Group where focus is on the Forestry & Wood-Processing and Agro-Processing Sectors”, the release said.