More measures to help private sector investment
by Robert Bazil
THE Government yesterday gained opposition support in the National Assembly in passing a Fiscal Enactments (Amendment) Bill 1999 intended to help private sector investment. The bill, piloted by Minister in the Office of the President with responsibility for Finance, Mr Saisnarine Kowlessar, seeks to give legal effect to certain proposals in the 1999 budget as some of the measures intended to stimulate investment in the private sector. Clause Two of the bill seeks to amend the First Schedule to the Income Tax (In aid of Industry) Act Chapter 81:02 to provide for initial and annual allowances in respect of the manufacture and production of ceramics and sanitary napkins. "In effect, the rates have not changed but we have extended the range of industries that now qualify for this benefit," Kowlessar said. It is not designed for imported products but to encourage local manufacturers to compete more favourably with foreign products, the minister told the House. He hoped this measure would continue to attract new investment in the non-traditional sector. Clauses three and four of the bill seek to amend Section 14 of the Property Tax Act Chapter 81:21, by increasing the levels required by individuals for filing a property tax return. This level was previously $500,000 on net property and has been increased to $1.5M. It will increase the exemption limit on chargeable property for individual tax payers from $5M to $7.5M. After this level is reached, taxes are computed at 0.5 per cent and then at 3/4 per cent after the next $5M. Kowlessar indicated that the intention is to provide relief to lower level income earners. The bill also seeks to increase the exemption limit for companies from $500,000 to $1.5M. The minister was confident the amendments will give effect to measures which have significant implications for investment by the private sector, and that they will go a far way to stimulate such investment and to contribute to growth and development. Opposition People's National Congress (PNC) member, Mr Winston Murray said his party supported the inclusion of ceramics and sanitary napkins. "...we share the optimism of the minister and the desire of the minister that the inclusion will create greater scope for investment by the local private sector in the production of these items," he remarked. Murray said the approach projected suggests that the government feels that it will deal with these matters case by case. According to him, the PNC had during the budget debates suggested a comprehensive review of that schedule which will allow the minister to determine what is the potential range of items that could benefit from the scope of income tax concessions, and put them in that schedule. This is so that an investor will know in advance of investing that these are areas that will qualify for income tax concession and he does not have to seek to find out with great difficulty whether or not they will, Murray said. He pointed out that now that they have been put in the schedule, it is still at the discretion of the minister on whether or not he will grant those concessions - tax holidays. But he argued that if the measures were to increase the investment by the private sector, "then we should remove the discretion from the minister, having determined the list, and of things that qualify, there should be automaticity in the grant of the concession to the investor." He stressed that the PNC will always support any serious measure or policy brought by the government which will enhance the scope for private initiative, because "we believe" that is the key to unlocking Guyana's economic potential. Leader of The United Force (TUF), Mr Manzoor Nadir supported the bill although he felt that something more substantial was needed if Guyana was to attract and stimulate that investment. "What we are seeing here is a token gesture because of some strong lobbying...they rightfully are getting some relief, but what we need is something more substantial", Nadir contended. "We look forward to supporting whenever those come, a comprehensive review of that Income Tax Act (in aid of industry), and also to deal with the issue of a ceiling on property tax that will bring meaning to some of the larger companies and individuals," he said. In response, Minister Kowlessar pointed out that the amendment has nothing to do with tax holidays but to increase the range of products to qualify for favourable depreciation allowances. He said the government will try to ensure that it has a formula and guideline as requested.
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