Economic growth predicted at 1.8% -no new taxes in budget By Gitanjali Singh Stabroek News March 27, 1999 For the third year running no new taxes have been introduced by the government but the national budget presentation yesterday was also short on specific measures to spur investment and economic growth or diversify the country's productive base. The budget presentation by Finance Minister, Bharrat Jagdeo, spoke of measures to be embarked upon and predicted a 1.8% growth of the economy even as it acknowledged the continued deterioration in the world's commodity markets. A number of measures already outlined by President Janet Jagan in October last year, as well as some adumbrated in the 1998 budget, were repeated in this year's, along with programmes already made public by various government ministers. Salary increases for public servants were absent from the budget as negotiations are currently underway and for the second year running there has been no increase in the personal income tax threshold. Jagdeo said that he would return to the House for supplementary provisions once agreement is reached with the unions on public servants' pay. Wages for the disciplined forces, teachers and pensioners will also be catered for then. But significant among the new measures and policies announced is the creation of a Tourism Board with a subvention of $15 million this year. This board will be tasked with reviewing the incentive regime of the tourism sector so as to boost the fledgling industry in Guyana. Also noteworthy in the budget was an increase in the property tax exemption threshold for both individuals and companies. For individuals, the threshold has been raised from $500,000 to $1.5 million and for companies from $5 million to $7.5 million. Persons and companies with net property values below these amounts will not be required to file returns. The proposed amendment will take effect from January 1, 1999. Jagdeo is also proposing to amend the Income Tax (Depreciation Rates) regulation to increase the depreciation rate for electrical equipment, including computers, from 20% to 50%. This proposal when given effect to, will be from January 1, 1999. The minister also indicated that in order to continue to attract non-traditional investments for new industries, the government will move to grant favourable accelerated allowances in accordance with the In Aid of Industry Act. He promised to table in the National Assembly, amendments to the first schedule made under the principal Act, to include industries engaged in the production of ceramics and sanitary napkins. He also said that legislation to reduce the Stamp Duty of six per cent will be effective to bring relief to companies seeking to increase their capital base. Jagdeo also reiterated that the government is to conduct a sector by sector review of the incentives regime to determine their attractiveness and will be working with the private sector in this regard. Of the record $51 billion budget, $119 million has been earmarked for the poverty alleviation programme this year and $250 million has been budgeted to assist the neighbourhood democratic councils and municipalities in implementing their programmes. Another $70 million has been budgeted under the three-year programme for officers deemed vital to the civil service. This programme started in 1998. The Common External Tariff is to be reduced to 20% from 25%. Still incomplete from the 1998 budget presentation are a Mortgage Financing Act, the amendment to the New Building Society's Act, the legislative framework for a Private Sector Development Bank, tender board reforms, the Eccles, Lethem and New Amsterdam industrial estates, the pre-feasibility studies for a deep water harbour and a bridge across the Berbice River, working to complete the road to Brazil and developing the second and third phases of the MMA/ADA project. Rather, Jagdeo said yesterday that preparatory work will continue this year on the large infrastructural projects such as those mentioned above. "The government will seek private capital for the development of these projects," the minister stated.