VAT Removed From Education Services
GEORGETOWN, Guyana – The Guyana government Monday said that the economy is expected to record a 2.9 per cent growth this year after experiencing both positive and negative growth in 2016.
Finance Minister Winston Jordan delivering the GUY$267.1 billion 2018 national budget statement to Parliament, revised the projected growth rate from 3.2 per cent in his mid-year report, telling legislators that the continued weak performance in mining, quarrying, sugar and other sectors, led to the growth rate for 2017 being revised downward.
Jordan said that despite global challenges, Guyana’s economy has managed to grow at an average of three per cent over the period 2015 -2017, noting “this was achieved at a time when most of our neighbours have been facing economic and financial crises.”
The Finance Minister said that the country’s debt to Gross Domestic product ratio had been kept at a manageable rate, in keeping with internationally acceptable standards.
“At 45.2 per cent of GDP, Guyana has one of the lowest debt ratios in the Caribbean,” Jordan said, noting that contrary to statements from varying sectors of the economy, the country’s net foreign assets have increased to a projected US$613 million compared to US$611 million in May 2015.
Jordan said that sugar production is expected to further decline this year, partly due to ongoing industrial unrest, with an estimated 152,000 tonnes of the commodity expected to be produced by the state-owned sugar Guyana Sugar Company (GUYSUCO), a decline of 17.2 per cent over last year’s output.
He also attributed the latest slump to a loss of 22,000 man days as a result of continued opposition to ongoing restructuring plans at the sugar company.
He told legislators that rice production increased due to more cultivation and the livestock sector is expected to grow by 4.4 per cent while fisheries will record a one per cent growth.
The mining and quarrying sector will contract by 1.9 per cent but gold declaration will remain stable, while other mining sectors like bauxite is expected to decline.
In his presentation, the Finance Minister said that the David Granger coalition government had been able to fulfil a number of promises including a 50 per cent increase in the minimum wage, while the income tax threshold was increased by a minimum 20 per cent, the marginal income tax rate reduced to 28 per cent and taxes removed from employees’ contribution to the National Insurance Scheme (NIS).
In addition, he said that old age pensions over the same period was increased by 45 per cent and public assistance grew by 27 per cent.
He said in keeping with government’s promise, the Value Added Tax (VAT) threshold was increased to GUY$15 million from a previous GUY$10 million, the range of exempted items increased, and the rate reduced to 14 per cent. Meanwhile the marginal rate for income tax for non-commercial companies was reduced from 30 to 27.5 per cent.
Jordan said that the 14 per cent VAT on all education services has been scrapped, and that the decision was taken “in view of the representations” made to have the tax removed.
The government is expected to lose an estimated GUY$342 million as a result of the initiative and Jordan said educational institutions must ensure that they pay up all other taxes.
“At the same time, efforts will continue by the GRA (Guyana Revenue Authority) to ensure these institutions become tax compliant,” he said.
Jordan also announced an amnesty to all delinquent taxpayers, corporate and individual, who are outstanding in the filing of true and correct tax returns and payment of their true and correct taxes.
He said the amnesty will be in effect from January 1, 2018 through September 30, 2018 and taxpayers who file and pay all principal taxes on or before June 30, 2018 will have all interest and penalties waived, while those who file and pay all principal taxes between July 01, 2018 and September 30, 2018 will have 50 per cent of interest and penalties waived.
Taxpayers who expect to benefit from this amnesty must file true and correct returns. Those found to be in violation will be subject to an audit and the attendant penalties and interest will be applied. The Guyana Revenue Authority will be devoting increased resources to enforcement of the income tax laws, Jordan noted.
The Finance Minister also announced that, following representation by the Guyana Gold and Diamond Miners Association, the tributors tax on gold miners has been slashed from 20 to 10 per cent, and they would still be required to file annual tax returns.
In relation to the two per cent gross tax, he said a sliding scale has been introduced. If the price of gold is under US$1,100 per ounce, the tax would be two per cent; US$1,100 to US$1,300 it would be 2.5 per cent; US$1,300 to US$1,600 it would be three percent and if the price increases to US$1,600 per ounce, the tax would be 3.5 per cent.
The Finance Minister, also said that rates and taxes in towns and villages countrywide will most likely be increased next year so as to enable the authorities to provide better services.
He told legislators that “outdated land values must be addressed” and in 2018, government would spearhead countrywide valuation to bring all property values up to date.
The budget was presented under the theme “The Journey to the Good Life Continues”. – CMC