Since taking office 18 months ago, the People Progressive Party/Civic (PPP/C) government has removed or reduced numerous taxes and has not implemented any new tax measures. And this is expected to continue through the upcoming 2022 National Budget.
During a televised interview on Friday, Vice-President Dr. Bharrat Jagdeo posited that Guyana has been able to withstand the economic challenges presented by the COVID-19 pandemic.
One economic challenge that emerged is inflation, which, in simple terms, refers to the increase in the prices for goods and services. With inflation, the same amount of money paid for goods and services at an earlier period will cover the cost of fewer of those goods and services.
This challenge means that the average Guyanese would experience a rise in the cost of goods and services, but the Vice-President said that the government has been working to cushion the impact.
“We tried to address the cost of living issues by removing taxes,” Dr. Jagdeo said.
He reminded Guyanese that dozens of taxes had been removed by the government since taking office in August 2020. That includes the removal of Value Added Tax (VAT) from water and electricity.
Additionally, the government also ordered that freight charges be reduced to pre-pandemic levels. This meant that there would be an adjustment to customs duties, excise taxes and input VAT on goods imported, resulting in lower prices for consumers.
With these efforts, Dr. Jagdeo explained that Guyanese would be paying about $40 billion less in taxes annually. And the Vice-President said the trend of reducing taxes, which was done in the government’s two budgets before, will now continue.
“(There will be) tax reductions in the budget, making the business process easier for people and of course, implementing the Local Content law,” the Vice-President assured Guyanese.
The National Budget will be presented to the National Assembly on Wednesday, after several months of rigorous planning.
It is important to note that the collection of taxes is part of how the government is expected to finance planned spending detailed in the National Budget. But during another televised address, which was aired on Sunday, Finance Minister Dr. Ashni Singh noted that the government is exploring several avenues of financing the budget.
He said that the government will secure finances from domestic revenue sources (which includes taxes and other revenues it collects), external borrowing from international financing arrangements and borrowing from the local banks.
Because the Natural Resource Fund (NRF) Act has been signed into law by President Dr. Irfaan Ali too, the Finance Minister also noted that the government will be able to use Guyana’s oil profits to finance part of the budget.
This is the first year that the government will be able to tap into that revenue, which has grown to more than US$600 million since oil production started in December 2019.