Income tax on salary, overtime threshold reduced; economic growth to slump

Last Updated on Saturday, 18 January 2025, 15:36 by Writer

Guyanese workers will pay less income tax, down to 25% from 28%, and no income tax on the first $50,000 of overtime or the first $50,000 from a second job, Finance Minister Dr Ashni Singh announced in Guyana’s GY$1.382 trillion 2025 National Budget.

“The concept of working longer and working harder, and in particular, working longer hours is one that we have to embrace, given the recognition that the size of the supply of labour is not growing in Guyana at the place at which the demand for labor is growing. The reality is we need more people. The reality is, we need more people than we have. We simply don’t have enough people, given the rate at which the economy is growing,” he said in his 5 hours, 6 minutes-long Budget speech.

He also announced an increase in the income tax from GY$100,000 in 2024 to GY$130,000.

Dr Singh also also announced that:

• GY$50,000 Because We Care cash grant for more than 200,000 children in public and private schools, plus GY$5,000 uniform allowance
• increases in the Old Age Pension to GY$41,000 and Public Assistance to GY$22,000
• GY$5,000 universal health voucher, totalling GY$5 billion, to every Guyanese to help finance basic medical tests
• GY$100,000 grant, totalling GY$1.3 billion, to every newborn baby born to a Guyanese mother
• GY$10 billion cash injection into the National Insurance Scheme to offer eligible 60-year-old persons a full and final grant if they have reached 500 to 749 contributions depending on the year their last contribution was made
• GY$10,000 per child income tax relief by one parent
• GY$13 billion to finance the operations of the University of Guyana now offering tuition-free education.

However, economic growth this year is expected to slump to 10.6%, the finance minister said, because the floating production storage and offloading (FPSO) vessel, Liza Destiny, reached peak production last year and and the One Guyana FPSO is not expected in Guyana until later this year.

Minister Singh said the FPSOs Liza Destiny , Liza Unity and Prosperity are expected to produce 674,000 barrels per day and that would “ramp up” to an average of 786,000 barrels per day by the fourth quarter of 2025 when the One Guyana FPSO begins production. Guyana is set to provide 246 lifts at one million barrels each, of which 31 would be for the Guyana government and the remainder for co-venturers ExxonMobil, Hess and CNOOC.

The Finance Minister also announced that US$2.5 billion could be withdrawn by government from the Natural Resources Fund (NRF) to spend on national development priorities.

Dr Singh said the non-oil sector is expected to grow by 13.8% in 2025 with inflation at 2.8%.

Touching on overall economic performance, he said Guyana recorded a GDP (gross domestic product) of 46.3% of which 13.1% was from non-oil sources such as crops, bauxite, other mining and quarrying, construction and the services sectors.