Gov’t unveils $230B budget – proposed measures include increases in Income Tax threshold, public assistance, pension

Making his second budget speech since the APNU+AFC Government took office, Finance Minister Winston Jordan – just moments ago – announced that this year’s National Budget is a whopping $230 billion.

The budget proposes among other things,  that, with effect from April 1, 2016:

• Old Age Pension will increase by $700 from $17,000 to $18,200 (nearly 50,000 pensioners are expected to benefit);
• Public Assistance will increase from $6,500 to $7,300 (over 9,600 persons expected to benefit);
• All Guyanese citizens 65 years and older will no longer be required to pay for a driver’s licence;
• All Guyanese citizens 65 years and older will be exempt from travel tax when travelling overseas on a Guyanese passport. However, they will still be required to pay the Airport Security Tax of $1,500.

However, the Government said any salary increase for public servants  for this year “has to await the conclusion of discussions with the relevant unions”.

Finance Minister Winston Jordan said the Government “understands the disappointment this will create among public servants”, but wishes to assure them of his Government’s commitment to their welfare and advancement.

“We ask that they give the collective bargaining process an opportunity to work,” Jordan told the National Assembly during his budget presentation (still ongoing).

With regards to measures to improve workers’ income, the Finance Minister propose to amend the Income Tax Act to increase the income tax threshold to $660,000, from $600,000. With this measure, he said over 68,000 workers will be removed from the income tax roll, in addition to the fact that workers have an additional disposable income annually.

 BUDGET 2016 HIGHLIGHTS:  

  GOLDEN JUBILEE

 *  $300M budgeted to support activities in celebration of Golden Jubilee year

• $3.1B to be invested through the Guyana REDD+ Investment Fund (GRIF) for ICT Access and E-services for hinterland, poor and remote communities
• Centre of Excellence in Information Technology to be set up
• Government will conclude negotiations with ATN and GT&T with the aim of ending GT&T’s monopoly
• Financing will be sought to implement Single Window Automated Processing System (SWAPS) to link licensing bodies to the Customs and Trade Administration
• Go-Invest to facilitate 160 new investments worth a total $11B

 HINTERLAND DEVELOPMENT:

• $6.72B allocated for improvement of hinterland, rural and urban community roads
• Soesdyke/Linden highway to be rehabilitated
• Alternative link to Bartica and other hinterland communities would be created after the finalising of the construction of the Parika/Goshen road
• Two new river vessels to be procured
• $1.3B budgeted for Bartica Stelling rehab and goods wharf at Kingston; docking of dredges and ferry vessels; dredging of Demerara and Essequibo Rivers
• $1.6B investment for Waterfront development programme
• $5.2B for continued development of the air services industry including CJIA expansion
• $2B earmarked (medium term) for airstrips and aerodromes’ improvement
• $6B to erect and strengthen sea defence
• $2.5B to be invested to improve GPL’s operational management capabilities
• Agreement for a US$50M wind farm at Hope Beach is being negotiated
• $1.5B programme to fund development of botanical and zoological parks and protected areas.

       *     $20.3B allocated to the agricultural sector

• More than $598M allocated to enhance diversified agriculture in hinterland, riverain communities and the intermediate and Rupununi Savannahs
• $9B to be injected in sugar industry to assist its recovery and modernisation
• A milk pasteurisation plant will be established
• 4,000 acres of state lands in Region 9 are being developed for constructing an agriculture station
• $14.4B budgeted for the continued upgrade expansion and rehabilitation of roads and bridges
• Negotiations with Chinese Government being finalised for the East Coast Highway construction
• More than $5B will be invested for Sheriff Street’s reconstruction
• A US$50M loan will soon be signed with the Indian Government to build a new road link between Ogle and Diamond
• $2.3B will be invested to upgrade the West Coast Demerara Road from Parika to Vreed-en-Hoop

  MEASURES IN SUPPORT OF THE ELDERLY

Jordan, in his budget presentation, proposed the following specific measures in support of the elderly segment of Guyana’s population:

1. increase the pensions payable to ex employees of Guyana Telecommunications Corporation. These pensioners have waged a prolonged struggle to get their correct pension, but were denied by the past regime. The increases will be effective from April 1, 2016.
2. Effective April 1, 2016 Old Age Pension will increase from $17,000 to $18,200. Nearly 50,000 pensioners are expected to benefit. According to Jordan, in the short space of eight months, the APNU/AFC Government has been able to increase old age pension by 38.7 percent, the largest increase in recent memory, and a testimony to its commitment to govern in the interest of all Guyanese.
3. He said effective April 1, 2016 Public Assistance will increase from $6,500 to $7,300. Over 9,600 persons will benefit from an almost 24 percent increase since this Government took office;
4. Effective April 1, 2016 all Guyanese citizens 65 years and older will no longer be required to pay for a driver’s licence;
5. Effective April 1, 2016 all Guyanese citizens 65 years and older will be exempt from travel tax when travelling overseas on a Guyanese passport. However, they will still be required to pay the Airport Security Tax of $1,500.

The Finance Minister said Government will continue to examine other ways of easing the burden on our elderly citizens, as they too look to enjoy the Good Life in their senior years. In this regard, he said Government will turn our attention to the plight of former public servants and parliamentarians, whose current pensions neither reflect the years of service given nor the positions from which they retired. This is because their pensions have been substantially eroded because of depreciation of the Guyana dollar and inflation over the years.

MEASURES TO IMPROVE TAX ADMINISTRATION

The 2016 Budget proposed the following measures aimed at improving the efficiency  in administering taxes by the Guyana Revenue Authority:

1. amendment to the Tax Act to ensure that prior to the issuance of all licences for public use, including licences to conduct forms of trade and business, the applicant has complied with his/her obligations to file annual returns and paid, or has made arrangements to pay, all taxes due and payable.
2. amendment to the Customs Act to provide for the non grant of exemptions to an applicant unless all outstanding tax returns are filed in accordance with the Income Tax Act, and all taxes have been paid or satisfactory arrangements have been made to pay such taxes.

            MEASURES TO ENHANCE REVENUE

Government, in the budget, also proposed to amend a raft of legislation, the effect of which is to increase the fees paid to obtain various licences. The pieces of legislation are:

1. Regulations under the Auctioneer Act
2. Regulations under Hucksters Licencing and Control Act
3. Regulations made under Miscellaneous Licences Act
4. Regulations made under the Motor Vehicles and Road Traffic Act
5. Regulations made under the Rice Factories Act
6. Regulations made under the Tax Act

In addition, it is proposed to amend Section 19  0f the Firearms Act Cap 16:05 to increase the annual fee for firearm licences as follows:

OTHER MEASURES

The Finance Minister said the Government is conscious of the need to provide incentives to the manufacturing sector, in order for it to become competitive, and, as a further measure to boost incomes of households, it has proposed to increase the rebate granted by the Guyana Power and Light Company from 10 percent to 15 percent, with effect from April 1, 2016.

He said, too, that with effect from February 1, 2016, the prices of fuel sold by Guyana Oil Company (GUYOIL) will be reduced as follows:

ECONOMY:

• Reserve money expanded by $12.3B to $138.2B
• Total liquid assets of commercial banks expanded by 14.6% to $122.8B
• By mid- 2015 the economy had already recorded deflation
• The Guyana dollar exchange rate remained stable throughout 2015
• The non-financial public sector performed creditably in 2015 recording a deficit of $1.2B compared to $36.4B in 2014
• Total revenue collected for 2015 was recorded at $161.7B, 11% more than in 2014
• Combined operations of public enterprises resulted in a surplus of $8.1B compared to a deficit of $1.5B in 2014

MANUFACTURING SECTOR:

• Manufacturing sector achieved a growth rate of 5.3 %
• Transport and Storage, Electricity and Water, Information and Communication, Financing and Insurance and Social services expanded by 2.3%
• Guyana’s overall balance of payments deficit improved with a 7.5% contraction amounting to US$107.7M
• Gold exports grew by 6.7%
• Lower disbursements to the non-financial public sector resulted in capital account surplus dropping by 66%

  GDP RATIO:

 GDP ratio reduced from 51.9% in 2014 to 48.6% in 2015

• Concluded negotiations for two Debt Compensation Agreements with Venezuela reduced oil debt by a further US$88.7M
• Total external debt service payments fell by 41% to US$98.4M in 2015
• Domestic debt stock increased by 4.2% from US$379.8M in 2014 to US$395.6M
• Real economic growth rate amounted to 3.4%
• Sugar industry grew by 6.9%
• Rice output for 2015 was 687,784 metric tonnes
• Livestock sub-sector grew by 5.8% which is double the rate achieved in 2014. Other crops’ sub-sector grew by 2 %
• The mining and quarrying sector grew by 9%
• Gold achieved unprecedented levels of production, spurred by the coming on stream of two large gold operations

 The Finance Minister  stated that this year’s $230 billion budget is “slightly higher” than  the one presented in 2015,  of $221 billion,  but that it is 20 per cent “more than the amount expended last year”.

Under the theme ‘Stimulating Growth, Restoring Confidence – The Good Life Beckons’, this budget builds on the policies and programmes included in the coalition’s manifesto so as to allow Guyanese the opportunity of having a “good life”, he said.

FIVE PILLARS:

 Jordan said the platform for Budget 2016 is anchored on the five pillars outlined in President David Granger’s New Year’s Speech. These are summarized thus:

• National Unity: Policies will be implemented aimed at reducing, if not eliminating, division and divisiveness in the society; and foster a more harmonious environment. In this year of our jubilee celebration, Jordan said the Government will strive to reaffirm our motto – ‘One people, One nation, One destiny.’
• National Infrastructure: In an effort to foster integration between the coast and hinterland, with a view of increasing access to the resources of the hinterland so as to accelerate the country’s development, the Government will be renewing, extending and expanding Guyana’s physical infrastructure.
• National Institutions: Government proposes to  strengthen our national institutions in furtherance of a stable legal and constitutional environment, and will pursue democratic renewal at the local government level to empower our people to better administer their communities.
• National Security: Government intends to strengthen the national security network to better protect our country’s patrimony and our citizens from both internal and external threats and aggression.
• Public Services: The Government plans to improve and extend education, health, sanitation, pure water supply, electricity services, safe and secured communities, affordable housing, adequate recreational facilities, and social protection to vulnerable and disadvantaged groups.