With no new taxes, record $781.9B budget focuses on current & future needs

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The 2023 National Budget, totalling a massive $781.9 billion, was on Monday presented by Finance Minister Dr. Ashni Singh and according to him, it focuses on meeting the current and future needs of Guyana.

“Budget 2023 strikes a balance between addressing the pressing needs of today and the critical investments needed for tomorrow, ensuring that both are attended to,” Dr. Singh said during his six-hour long marathon presentation.

Because of its focus, the Finance Minister said that the budget was crafted under the theme: “Improving Lives Today, Building Prosperity Tomorrow”.

This budget is some 41.4 per cent larger than $552.9 billion budget that was passed without changes in the National Assembly last year. It is the largest budget in Guyana’s history.

And according to Dr. Singh, the government plans to finance this budget without implementing any new taxes. For the second consecutive year, the budget will be financed in part by Guyana’s oil and gas revenues stored in the Natural Resource Fund (NRF).

He, however, announced that some taxes were being slashed or removed to help people.

KEY MEASURES

The government, through this budget, will remove the 14 per cent Value Added Tax (VAT) on new electric motor vehicles- that is, vehicles less than four years old. He also said that VAT on the sale of residential properties will be removed.

The government also plans to lower import duties on motor vehicles. The duty of new motor vehicles below 1500cc will be reduced from 45 per cent to 35 per cent.This is expected to reduce the cost of importing vehicles by about $200,000.

Meanwhile, for used imported vehicles below 1500cc, the government will replace the current tax rate with a flat rate of taxes of $800,000. This is expected to reduce the cost of importing such vehicles by $300,000.

As part of a raft of relief measures meant to support people, Budget 2023 also saw increases in the old age pension, public assistance and the schoolchildren’s cash grant.

The old-age pension is being increased from $28,000 to $33,000, placing an additional $4.4 billion of disposable income in the hands of 73,000 pensioners.

Public assistance will also be increased from $14,000 monthly to $16,000, benefitting over 29,000 persons, and placing an additional $700 million of disposable income to these individuals.

And the ‘Because We Care’ cash grant for every school child will see an increase from $25,000 to $35,000. This will benefit over 214,000 schoolchildren in public and private schools and will place an additional $2.1 billion in the hands of their parents.

He also proposed that the income tax threshold moves to $85,000, allowing thousands of workers to pay fewer taxes and take home more money each month.

This move will mean that over 12,000 people will no longer pay income taxes; those are people who earn 85,000 and less. What this also means is that individuals will only pay tax on the amounts earned after the first $85,000 is deducted.

Cognisant of global challenges that have contributed to the rising cost of living in Guyana, Dr. Singh pointed out that $5 billion will be set aside for measures to cushion that increase, as was done last year.

A sum of $10 billion will also be spent on the government’s part time jobs initiative and the state will maintain the reduction of freight charges and excise tax on fuel.

ALLOCATIONS

Outside of the budgetary measures, large allocations were made in various sectors.

The largest sectoral allocation went to public works with $136.1 billion alone specifically allocated for roads and bridges across the country. That includes developing interior roads, funding the new Demerara Harbour Crossing and other much-needed projects.

The health and education sectors also received sizable allocations, with a focus on building and upgrading hospitals and schools and on training workers.

Some $54.5 billion was allocated to push the government’s housing agenda through the construction of new housing schemes, establishing new housing areas and carrying our infrastructural works in regularised areas. A substantial $13 billion will also aid the construction of seven new water treatment plants and upgrade 12 existing ones.

Several agricultural sectors, ranging from rice and sugar to drainage and irrigation, were the subject of much governmental attention. As such, significant allocations were made including a massive $4 billion to aid efforts at the Guyana Sugar Corporation (GuySuCo).

The Wales Gas-to-Energy project, touted as one of Guyana’s most transformational projects, will advance as the government budgeted $43.4 billion to facilitate construction of power plant and associated facilities there.

To help boost local crime and security efforts, some $58.6 billion was allocated.

Other allocations were made for Indigenous People’s development, improving the justice sector and boosting tourism and business efforts.

Outside of spending, Guyana’s economic resilience will continue in 2023 with real GDP is projected to grow by 25.1 per cent this year– largely supported by the oil and gas sector.

“This position can be largely attributed to further ramping up of oil production anticipated in the Stabroek Block. Growth in the non-oil economy is currently projected at 7.9 percent this year, driven by continued expansion in construction, other crops, and wholesale and retail trade and repairs, alongside a rebound in gold mining,” he said.

It is anticipated that there will be 136 lifts of profit oil from the Stabroek Block in 2023.

Within this, government is projected to have 17 lifts of profit oil from the producing FPSOs, earning an estimated US$1,406.6 million in profit oil and US$225.2 million in royalties in 2023.

Last year, Guyana reocrded a 62.3 per cent rate of economic growth- making it the fastest growing economy in the world.

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