Sugar levy abolished
-Chandarpal confirms
By Gitanjali Singh
Stabroek News
May 16, 2002
The government does not intend to recover any more monies from the sugar industry in the form of a levy and is giving consideration to a dividend payment scheme as suggested by the World Bank, Agriculture Minister, Navin Chandarpal, said on Tuesday.
Chandarpal said the abolition of the levy was now only a formality as the non-budgeting for receipts from the sugar levy in this year's budget was in keeping with his government's stated position to reduce and eventually remove the impost and have those resources ploughed back as capital into the industry.
"There is not going to be any more levy," Chandarpal told Stabroek News after a media briefing at his ministry on Tuesday.
The government is still to announce the formal abolition of the levy which was put in place in 1974.
There have been calls by the PNC/R and the Rise, Organise and Rebuild Guyana Movement (ROAR) parliamentary representatives recently for a clear statement from the government on this issue after it was noted that there was no budgeted provision for a levy in this year's budget.
The government had committed itself in a memorandum with the World Bank last year, to shift from a sugar levy to a dividend payment scheme and although $1.2 billion was budgeted to come from the levy, none was collected in 2001. It had also committed itself in 2001, to waiving the levy to allow for Guysuco's modernisation project.
Asked about the dividend payment scheme to replace the levy, Chandarpal said that this was just a matter for consideration and not a certainty.
PNC/R executive, Winston Murray, recently told Stabroek News that his party had no problem with the principle of switching from the sugar levy to a dividend payment scheme, but was worried about the timing of the move and whether it was not in effect a bailout of the sugar industry from its financial difficulties.
"We are interested as a party, which has the national interest at heart, to see the viability of the sugar industry. But the question is not the principle of switching from the sugar levy to a dividend payment scheme which ordinarily would be quite appropriate but whether the timing of the removal is not linked to the state of the industry which is not profitable," Murray said recently.
He said if the government was in effect subsidising the industry by removing the levy then sugar would not be making a positive contribution to revenue and that was his concern.
He noted that the sugar industry was seen as a strong political ally of the PPP/C and the issue at hand really had to be the profitability of Guysuco to ensure it made a fair contribution to the government's coffers.
PPP General Secretary, Donald Ramotar had seen the removal as keeping a campaign promise by the party.
Ravi Dev of ROAR held a similar view to Murray's. His party's position has been that as a matter of principle, the sugar levy ought to be abolished, but not as an ad hoc measure simply to facilitate the planned modernisation of the Skeldon estate.
Dev said if the levy was removed permanently, then it would allow Guysuco to be treated as a real corporation and the profit-sharing formula on its books would be meaningful. However, he was sceptical of the government's approach to the matter, which he saw as a bailout of the industry and asked whether the decision made good business sense.
The two sugar unions, GAWU and NAACIE, had expressed hope that the decision was a permanent one by the government and welcomed such a move.
The levy - based on a formula - was instituted in 1974 when Guysuco was in private hands, to cream off revenues for Guyana and to prevent all the profits from being repatriated overseas. This was at a time when the industry was making huge profits because of the heavy demand and high price for sugar. It is not clear how much money has been creamed off from Guysuco since 1974 in the form of the sugar levy.