The government has given up billions of dollars in potential taxes to help many companies and sectors of the economy become more profitable over the past two years, President Dr. Irfaan Ali said on Tuesday night.
The Guyanese Head of State, who addressed the Guyana Manufacturing and Services Association’s (GMSA) annual awards ceremony, explained that his administration opted to remove many taxes in a bid to stimulate further investments that would lead to the growth of companies and various sectors.
For example, he said the government relinquished some $21 billion by removing the taxes on fuel, and another $5 billion by removing freight charges. Both of these were done during the COVID-19 pandemic when prices started to skyrocket.
The President also noted that the Guyana Revenue Authority (GRA) provided some $80 billion in fiscal incentives to the local private sector. By the end of 2022, a further $9 billion should be injected into the economy in tax refunds from GRA.
It was even noted that there were interventions for specific sectors. Mining, for example, saw the government relinquish about $12 billion in taxes to help keep the sector profitable.
“These are the figures.
“This is not gyaffing anymore, this is getting down to reality, President Ali said.
And the reality, he said, is that these measures were part of a carefully crafted plan to help stimulate economic growth in the non-oil sector, thereby allowing more companies in various sectors to become profitable.
That was evident from the sizable investments made by many local companies over the past two years. Even government bodies, like the Guyana Forestry Commission, were able to up their investments to make their operations more profitable.
Foregoing these revenues, however, was possible because of Guyana’s new pursuits as a nascent oil and gas producer.
“We can only do so because we have an expanded revenue base (with) oil and gas contributing to more revenue so that other sectors can be made more competitive,” the Head of State explained.
Outgoing GMSA President Rafeek Khan acknowledged the government’s efforts in helping local companies but told those gathered at the awards ceremony of the challenges local companies continue to face.
According to him, a majority of Guyana’s exports are raw materials. Manufacturing, he said, represents a meagre 2.2 per cent of the country’s Gross Domestic Product (GDP)- a figure that can change if manufacturers are able to boost production and exports.
But boosting business has its own unique challenges. For Khan, local manufacturers just “need a break”.
He lamented that there are no tariffs on raw materials exported to key trading partners like India and China but manufactured products carry about a substantial 15 to 20 per cent rate.
“in order to grow manufacturing… we need a break from these two countries. Buy manufactured products from Guyana,” the GMSA President said.
Khan also called for the government to establish an export arm, separate from the Guyana Office for Investment (GO-Invest) that would allow government and private sectors stakeholders to promote exports from Guyana.
That body too, he said, could help with much-needed research and marketing efforts.