2. Increase in Withholding tax
An increase in withholding tax from 15 per cent to 20 per cent, on interest bearing deposits, loans by secured bonds, and any other interest income that is currently being assessed at l5 per cent.

An increase in withholding tax from 10 per cent to 20 per cent on payments other than interest to non-residents. These measures take effect from April l, 2003.

3. Introduction of a Value Added Tax (VAT)
The government will introduce a Value Added Tax by 2006 and will start the necessary preparations immediately. It will be seeking technical assistance to ensure a successful launch of the VAT.

4. Measures to improve tax administration
The Government will make concerted efforts to improve the efficiency of the tax system and the administrative capacity of the Guyana Revenue Authority (GRA).

It will seek to enshrine, as far as possible, the incentives regime into law. This will entail amendments to the Customs Act, the Financial Administration and Audit Act and the Income Tax Act to enhance transparency.

The Government will strengthen the Income tax laws to enable the GRA to enforce presumptive assessments on professionals and other categories of self employed persons.

The Government will fill a number of critical positions and review the GRA Act and regulations. In addition the GRA will be tasked with preparing a strategic plan for information technology use; improving the collection of domestic consumption tax; improving inter-agency co-ordination to reduce smuggling and other forms of revenue leakage; and improving auditing and reporting.

The Government has provided for a significant increase in the budget of GRA for 2003. Further, the Government has secured a grant of US $300,000 from the Caribbean Development Bank to assist in the implementation of a project to upgrade the skills of the staff.

5. Measures to Increase Workers' Income

(l) Increase in salaries of public servants
The Government has repeatedly expressed an interest in developing a multi-year wage package for public servants, as this would obviate the need for annual negotiations while providing predictability and stability of the income of workers. It will continue to engage the unions in discussions with a view to agreeing to increases in wages and salaries for the next three years and has invited the unions representing public servants and teachers for talks. In deference to the commencement and outcome of those discussions, it will announce a salary increase at this time.

(2) Increase in Income Tax Threshold
Notwithstanding the very tight fiscal situation, there will be an increase in the income tax threshold from $216,000 to $240,000 per annum effective from Year of Income 2003. This measure would increase the disposable income of workers and result in about 13,500 persons no longer having to file income tax returns.