Budget 2017 spells doom for the mining sector – GWMO & GGDMA
The Guyana Gold and Diamond Miners Association (GGDMA) along with the Guyana Women Miners Organisation (GWMO) are urging the government to reexamine measures placed in the budget, to ensure that the local gold and diamond mining industry does not collapse. In a statement on Friday, the bodies said the Budget fail to deliver on government’s promises.
With the 2017 budget along with the previously proposed 3% reduction in the price for gold sold to the Guyana Gold Board and the removal of concessions to the sector, the bodies said this can only lead to lower declarations and a decline in the sector.
Given that the 33% growth of the mining sector in 2016 cushioned the decline in other sectors, the GGDMA and the GWMO is positing that there will be no growth in 2017 without mining, which is already seeing a decline.
In its statement on Friday, the mining bodies said they are “saddened to say that the 2017 Budget has no good news for miners”.
It was highlighted that despite saying in the 2017 Budget presentation that “the threat of gold prices declining in 2017, combined with rising oil prices and global issues such as derisking and climate change, will pose a major risk to our economy that will demand enlightened management”, no measures have been placed to help the industry regain its footing.
Outlining the ways that the measures in the budget will affect the sector, it was noted that “for about 30 years, miners have paid their taxes at the source, there was no need to file additional taxes, now we are given the few remaining days of 2016 to completely realign the sector”, however, this cannot be done given the cash culture of the sector. it was also stated that the sector in 2015 did not have to pay VAT on heavy duty equipment, matting, spares and other material used directly in the gold mining sector. However, in 2016 VAT was required on heavy-duty vehicles and a phased removal of all other concessions was implemented.
Additionally, it was disclosed that no fuel concession has ever accessed by any local miner in the sector, as there was an agreement, but unrealistic expectations by the Guyana Energy Agency made it impossible to be realised and led to the offer being taken away.
According to the organisations, the government promised to return these concessions but failed to do so.
“We cannot do more with less,” the mining organisations said, adding that there has already been a slowdown in the sector.
“If the concessions are not restored there will be a definite contraction of production. We will find it difficult to replace aging vehicles (an excavator has a life of 3-5 years in the interior). The sector will see additional downtime due to additional costs for quality equipment and fuel. The sector will see higher costs for startup and upkeep due to additional VAT on items previously acquired at concessionary rates. This downturn will see a significant spillover effect that will affect every sector of the Guyanese economy. There will be a fall in production and spending all around. This will make 2017 a very dismal year, one which we feel the government will not be able to tax itself out of” the GGDMA and GWMO said.
With regards to the increase in contributors tax from 10% to 20%, the GGDMA and the GWMO said serious objections, personal violence and harassment is already being faced from employees and therefore, they do not welcome the burden of collecting tax for Guyana Revenue authority (GRA).
The GGDMA and the GWMO want the Government to clearly understand that without the restoration of concessions, the gold mining sector will see decline rather than growth.
The bodies are of the view that the Minister of Finance is not properly briefed about what transpires in the gold and diamond mining areas of Guyana and therefore extends an open invitation, at his convenience to visit the areas.
They are also calling on sector Minister, Raphael Trotman to make urgent and strong representation for the sector and to vehemently object to any measure that would lead to contraction of the sector.