The Private Sector Commission has described government’s reduction of the corporate taxes as a “leap of faith” for the local private sector, one day after the 2011 National Budget was presented in the National Assembly.
Speaking at a news conference at the PSC’s Waterloo St office on Tuesday, PSC Chairman Ramesh Dookhoo said reduced corporate taxes translate to a more competitive private sector. “Our companies now have the opportunity to compete with the best in the Caribbean,” the PSC head pointed out.
It is his opinion that the sector will also be more investment-friendly, which could only augur well for the domestic economy. This is a direct product of government/ private sector collaboration as articulated in the National Competitiveness Strategy. There are more than 100 tasks in this strategy all aimed at making business in Guyana easier.
“The Private Sector Commission is vindicated in its collaborative efforts with government to bring various matters in the National Competitiveness Strategy to a head,” Dookhoo said. Such a partnership, Dookhoo posited, will continue to be advocated, with what he referred to as a level of “technical sophistication” in the commission’s push for various policy reforms.
The PSC is adamant that government has “moved the engine of growth into top gear”. As such, the commission foresees a private sector in the coming year that will enjoy the benefits of an emerged middle class that they think will drive spending, and drive the creation of new types of equity and collateral for further lending by banks and related institutions.
The commission’s finance and economic analyst Craig Sylvester in a preliminary analysis of the five per cent corporate tax reduction said it can only be of benefit to the local private sector. Sylvester pointed out that with more investment, increased employment opportunities are inevitable.
Finance Minister Dr Ashni Singh, in unveiling his Gy$161.4 billion National Budget, disclosed that corporate taxes for all companies, except telephone companies, would be slashed by five per cent.
In the case of commercial companies that paid tax at a rate of 45 per cent of chargeable profits, with effect from the 2011 year of income, they will now be required to pay 40 per cent.
Non-commercial companies that were required to pay 35 per cent of chargeable profits now pay 30 per cent. “Consequently, companies benefiting from this measure would be in a position to retain and reinvest a significantly higher share of their profits,” Dr Singh said.
Meanwhile, the PSC head congratulated government and the finance minister for bringing the country to what he calls a “watershed” moment in history, with the presentation of a budget that had a “human face”. He highlighted the lifting of the income tax threshold to $40,000 and other measures taken to alleviate the situation of the vulnerable and elderly. “… this means more disposable income in the economy and more dollars in the pockets of the working class,” Dookhoo outlined.
The personal income tax threshold has risen from Gy$35,000 at a rate of Gy$420,000 per annum. The finance minister explained that a taxpayer earning Gy$40,000 per month will now pay Gy$20, 000 less in income taxes in a year.
The public assistance, which was paid at a rate of Gy$4,900, has increased by 12 per cent and the 90,000 beneficiaries will from February 1, 2011 be able to receive some Gy$5, 500 per month. Further, more than 42,000 pensioners will now receive Gy$7,500 monthly as of February 1. This represents a 14 per cent increase over the current rate which stands at Gy$6, 600.
The Georgetown Chamber of Commerce President Komal Ramnauth, was present at the news conference, also signalled its support for the 2011 Budget.
Comments are closed.