Change Guyana, a new political party led by two businessmen, on Tuesday promised that they will reduce Value Added Tax (VAT) to 12 per cent and further increase the income tax threshold to $100,000 per month if elected to office.
The party wants to implement these measures in 2020 just after the March 2, general and regional elections.
Speaking at a weekly press conference at the Savannah Suite, Pegasus, Kingston Georgetown, the party’s Prime Ministerial Candidate Nigel Hinds stated that “the effective increase in income will allow for increased access to good and services for working-class employees, which will boost consumption and improve quality of life.”
The income tax threshold is at $780,000 per annum or $65,000 per month.
Additionally, the party wants to remove VAT from electricity, water, smartphones and cellular data plans to ensure low-income families can also afford access to the internet.
Included in its tax reform policies Change Guyana also wants to reduce the tax on the importation of non-commercial vehicles to 50% as opposed to the current 82% (45% duty, 10% excise tax and 14% VAT) on vehicles between 1500cc and 2000cc. Vehicles between 2000cc and 3000cc will be reduced to 75% overall while those over 3,000cc will be reduced to 100%.
As it relates to businesses, Change Guyana is hoping to repeal property tax, estate tax and capital gains tax to attract local investors.
According to Hinds, the average property tax collected in 2017 and 2018 was $4B and $43M for Estate tax while Capital Gains tax collected in 2015 and 2016 was $285.5M.
“The repeal of these taxes will reduce the tax collected by less than 3% for the specific taxes and will incentivize local businesses and individuals to have real ownership of property and allow the owners to price their property at market price,” Hinds told reporters.
Change Guyana is also proposing the implementation of tax credits to encourage employers to provide job skills training and banks and other lending institutions to finance small and micro-businesses.
With the implementation of these measures, there will be a decrease in Government’s revenue.
The party’s Presidential Candidate, Robert Badal said while the political party understands the role of taxes in the Government’s work, it does not agree with the level of taxation.
He believes that there will be no deficit since the measures will encourage investments.
“There will be a cycle of economic activity…our idea is to grow the pie to create wealth as the only basis to distribute wealth…from all indications, economic theory, when you reduce taxes you end up collecting more…because you tax more consumption more than performance and productivity,” Badal said.
When asked, Badal could not provide figures on how these measures will be plausible but noted that he and Hinds are relying on their experience in business.
“There is a contingency plan to balance the budget if our projection doesn’t materialize but we are business people, we invest, we know how to invest, we don’t create a big Government and then work backwards and say because of cost, we will raise taxes.”
Badal said these measures were presented to the current Government during budget consultations but were never taken into consideration.
Hinds is the owner of Nigel Hinds Financial Services while Badal owns the Pegasus Hotel and is also a major shareholder in Guyana Stockfeeds Inc.
Hinds told the media that he pays $2M in NIS, PAYE and other benefits for his employees while Badal said he pays over half of a billion dollars in employee, NIS, corporate, withholding and other taxes annually.