Budget Debate 20133470 05 Apr, 2013
Mr. Sharma: Mdm. Deputy Speaker, please allow me to congratulate the Hon. Minister of Finance for the excellent Budget presentation - as he is known for articulating and compiling such a Budget - and also the staff of the Ministry of Finance, and staff of the Ministries, Departments and Regions in compiling their budgets submissions for the Regions. Nevertheless, the views that will be expressed by me will be the views of the plenty poor people of Guyana. I am obligated to represent the people of Guyana by being the voice of the people in keeping with Article 9 of the Constitution of the Cooperative Republic of Guyana which states:
“Sovereignty belongs to the people who exercise it through their representatives and the democratic organs established by and under this Constitution.”
Let me confess that the majority of the people of Guyana say Budget 2013 at a glance is undoubtedly a good budget for all Guyana. Reinforcing this is the theme of Budget 2013 “Overcoming Challenges Together, Accelerating Gains for Guyana" This is where the problem exists. The Budget 2013 was not crafted for the people of Guyana but rather for Guyana. It was crafted for the rich and middle income earners, the large and medium scale enterprises and finally for the destitute of Guyana that will be locked away but nothing for the working poor, the small man, the real man, earning the minimum wage.
After the more than three-hour presentation by the Hon. Minister of Finance Dr. Ashni Singh on Monday, 25th March, the length of the presentation and the assertion that the $208.8 billion Budget is the largest ever being there was $88.3 percent increase over the 2012 $budget gives the erroneous impression that these facts alone make the Budget an excellent one. The Hon. Minister of Finance mentioned the sterling performance of the economy and all these things are commendable achievements for this administration. However, our poor and ordinary citizens are asking the question about what all this sectoral growth means since there is little or no improvement in the standard of living.
Several times the people of Guyana have heard the Hon. Minister say the largest budget ever. What does this mean for the plenty poor people of Guyana? Does the Government use the largeness to pay the public sector employees a decent living wage or a public assistance increase that is truly meaningful or alternatively to ensure that old age pensions are adequate? The answer is no.
No meaningful engagement was embarked on with the respective union representing public sector employees to determine the decent living wages, not even an interim salary increase was mentioned in the Budget although Volume 1 of the Estimates of the public sector page 44 Agency 3 - Ministry of Finance, Programme 031-Policy Administration under Line Item 6141, Revision of Wages and Salaries, contains $4.4 billion. This amounts to $17.7 percent over what was allocated in Budget 2012. What else must the Guyanese people expect from a Government that is bold enough to glorify commitment and renege on its implementation? As the Hon. Minister of Finance indicated at paragraph 3.20 of the 2013 Budget speech that in keeping with the stated preference of the multiyear agreement as the basis for setting emoluments in a predictable manner Government concluded with the Guyana Teachers Union in the first half of 2011 a second 5-year agreement from 2011 to 2015 which provided for predictable salary increase along with addressing a number of non-salary benefits of the teaching profession in the public sector. However, the Minister of Finance saw it fit not yet to pay the 5% increase and not to include this increase in the Estimates for the year 2013 to reflect the agreed upon increase in salary with effect from 1st January, 2013, and not to implement the other non-salary benefits. In addition also, there was no mention of increase in public assistance to the vulnerable Guyanese including those living with disability. Therefore, those receiving public assistance will have to be content with the miserly amount of $5,900 per month for 2013- shame, Mdm. Deputy Speaker.
This represents a deviation from the norms, whereby in previous budgets, both public assistance and old aged pensions would receive an increase. As in 2012, when the Hon. Minister of Finance announced an increase, both the public assistance and the old aged pension was increased by 7% and 8% respectively, but a public assistance of $5,900 per month with effect from May, 1st, 2012 being announced.
In addition, did this largest Budget deal with our most important problem of unemployment and underemployment, in particular, the youth population? The Government love to exaggerate that over 4000 students will be writing Caribbean Examination Council (CXC) this year or alternatively boast of the large number of graduates coming out of the University of Guyana. The University of Guyana graduated 1480 students at the 46th Vocational Ceremony. In addition, Cyril Potter College of education graduate 862 educators at its 78th Vocational Ceremony. The Government did not address the employment opportunities that persons will be having. This is what is lacking in this budget. Every year, a similar amount of person will be graduating and the employment opportunity is diminishing.
Did this largest budget address the situation of the flight of skills and most of all, the tax burden, in particular Value Added Tax (VAT)? In relations to VAT, Guyana had undertaken a major reform of its taxation system. Guyana adapted a VAT Act and also enacted Excise Act legislation in 2005. The VAT which took effect on January, 1st, 2007 at a general rate of 16% replaced Consumption Tax, Service Tax, Hotel Accommodation Tax, Entertainment Tax, Purchase Tax and Telephone Tax. Although there was the debate on the VAT Bill in 2005, in the Hon. House, the Government Ministers emphasised that the overall collection of VAT, plus Excise Tax would be revenue neutral; whatever that means. Since the implementation of VAT, the prices of commodities increased. This seems to suggest the prior existence of a very strong underground economy involved in smuggling and under invoicing, which ironically appears now to have benefited the poor working class. Even more ironic now, with the implementation of VAT plus Excise Tax, the Government is collecting a significant windfall at the disadvantage of the poor working class. Page 12, paragraph 3.22, of the 2013 Budget Speech, indicates that the Value Added Tax (VAT) and Excise Tax collection increased by 7.2% to $56.8 billion.
In addition, VAT on the domestic supply of goods amounted to $14.8 billion or 13% above 2011. This amount is what the poor people are paying. It was $14.8 billion the Government collected in 2012. Mdm. Deputy Speaker, you may be interested to know that the Hon. Minister projected in the Estimates of the Public Sector, Current and Capital Revenue Expenditures for the year 2013, Volume 1, revenue collected for VAT on the domestic supply of goods in the sum of $16.5 billion or 11.5% over 2012. Page 13, paragraph 3.23, of the 2012 Budget Speech which indicates that Value Added Tax (VAT) and Excise Tax collection increased by 9.7% to $53 billion. In addition, VAT on the domestic supply of goods amounted to $13.1 billion or 7.7% above 2010. What this is indicating here is a progressive increase of VAT that the poor is paying. For 2013, the Minister is projecting a $16.5 billion or an 11.5% increase. Maybe the Hon. Minister may see it fit to ultimately reduce the VAT from 16% to 14% in the first instance during the 2013 Debates.
The people want to know whether this budget offers them a better quality of life and guarantees a better quality of service, security and consumer protection. Whilst most Guyanese use these and other relevant indicators to determine the excellence of the budget, it is the view of the many Guyanese that the Budget is a disappointment. It is not going to significantly transform the people’s lives because of the absence of programmes to address the working poor and vulnerable, including persons with disabilities. Further, it is the view of the people of Guyana that the Government’s responsibility is to put in place policies that will give the poor and vulnerable people hope and skills to build their capacity. Therefore, priority must be given to projects that raise the level of income and creation of permanent jobs.
In keeping with Article 1 of the Constitution of the Cooperative Republic of Guyana which states:
“Guyana is an indivisible, secular, democratic sovereign state in the course of transition from capitalism to socialism and shall be known as the Co-operative Republic of Guyana.”
However, it is seen that the PPP/C Government is in the course of transition from socialism to capitalism, which is a direct violation of Article 1 of the Constitution of the Cooperative Republic of Guyana. Socialism speaks about the people; capitalism speaks about business people. This budget is about business people and not the people. It is a violation of the Constitution.
A preliminary assessment of Budget 2013 will reveal that whilst there are a few goodies, such as, reduction in the Personal Income Tax rate, increase in pension for senior citizens, increase in the tax free threshold for Property Tax, introduction of a mortgage interest relief and an old aged pension electricity assistance programme, they are all illusions. No real attempt has been made to give any substantial increase in the minimum wages to enable the purse of the poor public servants and teachers at the lower end of the salary scale to cope with the rising cost of living. The abovementioned goodies is of no relevance to the thousands of workers categorised as clerks, office assistants, handymen, drivers, cleaners, labourers and many other workers in the Public Service. In addition, security guards, sales girls and factory workers in the Private Sector, proprietors of small businesses, carpenters, masons and other self employed individuals, all whose gross pay is less than $40,000 per month, do not even presently benefit from the $50,000 threshold announced in Budget 2012. Needless to say that they would obviously not benefit from the reduction in the Personal Income Tax Rate announced in Budget 2013.
Let me examine the reduction in the Personal Income Tax Rate from 33 1/3% to 30%. The Public Sector employee earning $51,000, that is $1,000 over the tax threshold of $50,000, would receive on $33 more on his net salary. However, the Public Sector Employee who is earning $51,000 per month, to maximum of $150,628 per month - being the maximum ceiling for National Insurance Scheme (NIS), will now have to pay 1% increase on its employees’ contribution, which works out to be, at a minimum $510 and a maximum of $1506. So the employee that is getting $1000 and benefitting from the reduction in the Payee is $33 savings, but he will be paying $510 to the NIS; so he is worst off at the end of it. His take home pay salary would be less coupled with that of transportation and food bills, which will go up because of the unscrupulous business community that embrace this budget. They will increase the prices because they believe the people are taking home more money, which is not true. However, the poor will have to pay because there is no price control mechanism. It does not matter what amount of salary they receive, even with a Constitution that says, “Guyana is in the course of transition from capitalism to socialism”. Shame!
All what the poor working class is asking for is when they would actually begin to see a change in their pocket. Needless to say, the working poor Guyanese do not take loans to build their homes. They live in what many would call “slum like conditions”. They cannot even qualify for a small loan, much less to borrow up to $30 million to meaningfully benefit from the mortgage interest relief. In addition, needless to say, their mansions do not value $40 million in order for them to benefit from the increase in the Property Tax threshold. Budget 2013 appears to be more of a political management tool in preparation for elections and to test the joint Opposition resolve.
It is the camouflage of figures intended to dazzle and bemuse. It is one designed to bail out Government’s cooperation, plagued with inefficiencies and mismanagement. As can be seem with the $1 billion to be transferred by Government to GuySuCo; the $11.2 billion to be provided to Guyana Power and Light Company (GPL); the additional $590 million representing electricity subsidies to old age pensioner; and the $215 million to be paid to the NIS, representing the 1% increase in contribution payable with respect to the employed persons whose income is not more than $50,000 per month.
It is the view of the people of Guyana that the abovementioned entities need institutional restructuring and depolicitisation to address the current situation of the mismanagement and efficiency before any funding is considered. The continual bailouts are preventing much needed financial resources from being utilised to pay better wages and salaries, old aged pensions, public assistance, reduction in VAT and the reduction in the Berbice Bridge toll.
Further, Budget 2013, this $208.8 billion budget and the largest ever contains $85.7 billion and appears to provide for handing an identified group of contractors, both locally and internationally, large contracts for the procurement of goods and the execution of works without a fair equitable transparent process and without safeguards on corruption. No meaningful attempt is being made by this PPP/C Government to have the members of the Public Procurement Commission appointed in accordance with Article 212 X, paragraph 2 of the Constitution.
Needless to say, the PPP/C have not yet submitted the nominees for the Public Procurement Commission to be nominated by the Public Accounts Committee and approved by the National Assembly before being appointed by the President. Shame Mdm. Deputy Speaker. Any responsible thinking political party that demands transparency, accountability and an end to pervasive corruption that is so wide spread in Guyana would want to put the necessary systems in place to curb the situation. Even more reasons to do so, after knowing that the budget would be the largest ever, at $208.8 billion, with a $69.6 billion budgeted for total audit charges and $85.7 billion budgeted for Capital Expenditure.
To reinforce my argument, in this year alone at least 74% of $155.3 billion of Public Expenditure relates to the procurements of goods and services as well as the execution of work. However, there was nothing mentioned in the 2013 Budget Speech about the long awaited, as I mentioned, Public Procurement Commission to oversee all the Government procurements and the functioning of the various tender boards and to ensure that the contracts to the value of billions of taxpayers’ dollars are awarded transparently and not skived in after the handpicked contractors through a flawed tendering process that is currently opened to manipulation.
It is not secret that there is huge public dissatisfaction in the way contracts are awarded and the quality of works executed, such as, the yearly procurement of drugs and medical supplies for the Georgetown Public Hospital Corporation and the Ministry of Health with the prices, which are a far cry from being realistic and competitive. The many PPP/C flag ship projects, like the bongle’s US$15.4 million contract which was handed to Synergy Holdings. The company had an address which was sari and puja Shop, in Florida and was given the money to build the Amaila Falls and the overpriced Marriot at US$60 million. It was reported sometime that a similar project of this nature in Jamaica would cost about quarter of this amount.
In addition to this, there is the Speciality Hospital the Government is building for US$18 million. In addition to that is the $150 million expansion of the Cheddi Jagan International Airport (CJIA). It was also reported that at St. Martin, the Princess Juliana International Airport (PJIA) was being built at $117 million, also overpriced; in addition to this is the barber shop company, who in 2011 received $1.46 billion in contracts; the $804 million Amaila Falls Project and; in the $20 million Skeldon Factory.
Sectorial developments and the agenda for 2013; Goal - the people of Guyana believe that more could have been done if the Government would have addressed the haemorrhaging of the gold, diamond and timber industry where the loss of revenue is of the greatest.
Rice – the Hon. Minister of Finance indicated that rice production was reaching unprecedented levels of greater than 450,000 tonnes annually. However, there was no mention of the hard work that the rice farmers put in producing the rice and all the challenges they face. Now they are facing attacks by wild cows and so forth. Only today, I received complaints from the rice farmers about long lines at the mills. Some millers are taking the paddy, but the price is not giving to the rice farmers. For the last crop, the rice farmers mentioned that they received $4100 per bag of paddy and now the price is being talked about of $3500 - $6500 per bag. The rice farmers are saying this is inadequate and they cannot live on such meagrely sums. It is hoped that this matter can be addressed as soon as possible, since rice is in the field presently waiting to be cut, but apparently there is no market. Thank you. [Applause]
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