Pre-Budget Comments

On March 15, 2002, the PPP/C Government presented its tenth successive budget to the National Assembly. This third budget presentation by Minister of Finance - Mr. Saisnarine Kowlessar was done at the first sitting of the National Assembly for the year 2002.

The independent Stabroek News, in a feature on Budget 2002 in their January 26, 2002 edition, carried the comments, expectations and suggestions of leading businesspersons, the majority of whom described 2001 as a difficult year. Against a backdrop of international economic downturn after the events of September 11, 2001 in the United States, the Private Sector holds the general view that the Government urgently needs to provide a stimulus package to avoid an economic crisis in Guyana, increase the income tax threshold and provide relief to the rice sector. Many leaders of the private sector complain that the Government has ignored suggestions put forward by them in the past and expressed the hope that the 2002 consultations would be more meaningful. Reflecting their continuing disappointment that sufficient notice is not given to their recommendations, two major organisations - The Private Sector Commission and the Trades Union Congress – revealed that their 2002 budget submissions were indeed a resubmission their 2001 proposals.

Mr. Peter DeGroot, Vice-President of the Private Sector Commission, emphasised that the PSC considered that Guyana urgently needs a stimulus package and that the tax base must be broadened to ease the tax burden. Mr. DeGroot believes that the non-taxable income tax threshold should be increased and that the Government needs to provide immediate relief to the rice industry as a whole instead of separately dealing with small and large farmers.

Mr. Eddie Boyer, Managing Director of National Hardware Guyana Ltd. and President of the Georgetown Chamber of Commerce and Industry (GCCI), felt that a stimulus package and foreign direct investment are vital to Guyana’s development. He stated that the GCCI would like the abolition of the 2% Minimum Corporation Tax, an increase in the income tax threshold, a review of the tax system, reorganisation of the Customs Department, reduced rates of Corporation and Property taxes and mortgage relief to first time homeowners.

The CEO of Farfan and Mendes – Ms. June Mendes – feels that there should be an increase in the non-taxable income threshold and that a review of customs duties and consumption taxes needs to be done. She would also like to see the corporation tax rate of 35% apply to all corporate taxpayers.

Mr. Yesu Persaud, Chairman of the DDL conglomerate, believes that the Government needs to stimulate the economy to encourage investments, create jobs and increase consumer spending which will in turn provide tax revenue.  He was hopeful that the consultative process would become more meaningful with the formation of the Business Advisory Group to the President.

Mr. David Yankana, Executive Director of the Consultative Association of Guyanese Industry and Director of the Private Sector Commission, believes that the consultative process with the private sector needs to be “dealt with in a more respectable way”. He feels that the Government should provide incentives for agro-processing and create tax-free zones in New Amsterdam, Corriverton and Linden. He also stated that the tax system needs to be reviewed and thinks the Government should implement the system of Value Added Tax urgently, and increase the non-taxable income threshold.

President of the Guyana Manufacturers’ Association, Mr. Norman McLean, noted that there “is a need for a stimulus package to get the economy going both on the production and consumption sides”. He opined that there has to be an increase in the non-taxable income threshold, a revision of consumption tax and customs duties and the enhancement of customs enforcement.

Mr. Beni Sankar, rice miller and Chairman of the Rice Crisis Committee (RCC), felt strongly that a return to growth of the economy required the introduction of a stimulus package with a specific component for the troubled rice industry.  

Chairman of the Private Sector Commission, Mr. Brian James, expressed the hope that the 2002 Budget consultation process would be meaningful and recommended an increase in the income tax threshold, tax relief for first-time home owners, the widening of the tax net, the removal of the 2% turnover tax and property tax, the securing of investment and special help for the rice sector including a flat tax of 10% on diesel.  

In the Guyana Business Outlook 2002 Report, an annual publication by Ram and McRae, companies responding to the survey were asked to select from a list of eighteen measures the five they would most like to see the Government take action on. The top five issues identified were lowering of direct taxation, reducing interest rates, controlling inflation, implementing a long-term plan to assist manufacturers and taking steps to lower exchange rates.

In a letter to the editor in the Stabroek News on February 22, 2002, Mr. Joey Jagan predicted that “the Budget will be a rehash of the same old story where excuses and blame on factors not related to Government performance will be peddled”.

In the letter columns of the State controlled Guyana Chronicle, a leading Government supporter referred to “excitement being engendered by the budget” and expressed the hope that “our competent Finance Minister will give us added reasons for encouragement”. And on the eve of the budget presentation, the Leader of the Peoples” National Congress – Reform was reported as predicting that the country might be heading for economic crisis.

After years of low or no growth, Guyanese were hoping for strong action from their Finance Minister.