The Guyana Manufacturing and Services Association (GMSA) on Thursday reiterated the need for cheaper electricity, a call that was backed up by the Inter-American Development Bank (IDB).
President of GMSA, Shyam Nokta issued the call for a reduction in taxes on fuel at the formal opening of his organisation’s Annual General Meeting held at the Marriott Hotel.
“Tax measures introduced in budget 2017 such as the VAT on electricity further compound this issue and continue to affect manufacturers in 2018. We have made a strong case for tax relief on fuel for manufacturers, similar to what other sectors benefit from and we hope that this would be given consideration,” he said.
Nokta’s concerns came against the background of one of Guyana’s three large manufacturers, which self-generates its industrial electricity supply, reporting a 40 percent increase in the cost of fuel in recent months. A senior official of that company pointed out that while that entity’s revenues have increased, its profits have declined due to rising fuel costs. The official said the Guyana government needed to urgently reduce the excise tax on fuel which would result in a drop in prices at the pumps.
The IDB’s Representative in Guyana, Sophie Makonnen noted that the IDB was supporting this country’s developing infrastructure to improve the provision of better public services especially the supply of reliable and environmentally sustainable electricity in urban areas and the hinterland. She stated in her address to the GMSA’s AGM, that “reliable and efficient electricity could go a long way towards improving the business environment”.
The World Bank’s Doing Business 2019 report identifies specific areas in which Guyana needs to improve. Makonnen cited streamlining and improving government services in the areas of electricity, bureaucracy, and transparency that can all significantly contribute to improving the business climate and competitiveness.
The GMSA praised the Guyana government for providing a number of tax breaks and other incentives through representation at an agreed joint public-private roundtable that started in 2019. Nokta hoped that the roundtable would survive a change in government.
“This mechanism has proven useful in helping to share information and perspectives and to advance collaborative actions and has helped foster a functional working relationship between the GMSA and the Government of Guyana. “It is my hope that this mechanism can continue to function and grow – whichever political party is in Government – as it has certainly demonstrated that public-private partnership is possible at a strategic level,” he stated.
The bi-monthly roundtable continues to focus on agro-processing through a Joint Technical Committee co-chaired by the Government of Guyana and the GMSA.
The GMSA said budget 2019 contained provisions that can prove helpful to the manufacturing sector. They include the reduction of the manufacturing and non-commercial rate to 25 percent, reduction of income and corporate tax rates to 25 percent on taxable profits, and reduction in excise tax on indigenous wines and other locally manufactured beverages.
At the same time, the business organisation said “the overall business environment and ease of doing business has not been significantly enhanced in recent years and this ultimately will affect all businesses.”
Among the invitees were former Junior Finance Minister Juan Edghill and Senior Minister of Finance, Winston Jordan.