GEORGETOWN, Guyana, CMC—The main opposition People’s National Congress Reform (PNCR) says it will provide a GUY$400,000 (One Guyana dollar = US$0.004 cents) monthly tax-free threshold and tax allowance should it form the government following the regional and general elections scheduled for next year.
The PNCR said its proposal is underpinned by “our moral duty to end poverty and by sound financial and economic reasoning.”
It recalled that, as part of the opposition coalition, A Partnership for National Unity (APNU) had outlined a “number” to its long-standing policy proposal of increasing the tax-free threshold and introducing a tax allowance for personal income.
“We announced that, as the next government, we will set the threshold at GUY$400,000/month in our first national budget. This threshold will also serve as a tax allowance, producing the double impact where those who earn GUY$400,000 a month or less will pay no taxes, and those who earn higher will pay taxes only on the amount above GUY$400,000/month. “
The PNCR said that, for the record, it recalls that PNCR leader Aubrey Norton, in his Republic Day 2021 address to the country, announced that his government would abolish income taxes for low-wage workers.
“More recently, in January this year, the main opposition, to respond also to the struggles of the middle class, publicly promised to extend the ban on income tax to workers in the middle-wage bracket.”.
“ In passing, we must highlight that the very statement…had also called for the fair distribution to households of the GUY$60 billion oil revenue windfall received in 2022, one of several such calls by the main opposition over the last two years that has now pressured the government to announce its desperate one-off GUY$200,000 per household payout.”
The party said that the PNCR/APNU’s tax-free threshold and tax allowance “would move the needle in the lives of over 210,000 workers, and that coupled with its pledge to raise the salary of all government employees by 35 percent and with its social programs for all, “the positive impact on poverty, economic insecurity, inequality, opportunity, and economic dynamism would be immediate, self-perpetuating, and self-augmenting.
“We project that the tax-free threshold and tax allowance would (i) help reduce poverty and economic insecurity as a government’s moral duty to guarantee citizens a decent standard of living and to respect and ensure their economic and social human rights; (ii) help create a demand-driven economy where the country’s productive capacity would expand in response, aided by the introduction of targeted facilitating conditions.
“Those conditions would include reducing the well-documented costs of doing business in Guyana; (iii) accordingly, increase corporate tax revenues; (iv) increase tax compliance by encouraging high-income earners to pay their full contributions, (v) increase the collection of VAT as consumers spend more on goods and services, and (vi) create a sense of shared prosperity and shared destiny.”
The opposition party said such a proposal prompts several questions, the first of which is cost and affordability.
“Let us emphasize that this tax measure has the potential of paying for itself financially and economically in quick time through increased VAT, higher personal income tax compliance, higher corporate tax payments, and a larger non-oil economy,” insisting that the tax measure is affordable.
“We base our estimate on the government receiving GUY$74 billion in 2023 in personal income taxes—our tax-free three billion yearly – a total that would be under four percent of government expenditure.
“In oil-rich Guyana, cost and affordability are within our reach,” the party said, adding on the question of financial sustainability, which is a function of both sustainable revenue and priority setting.
The party also discussed whether such a large increase in the tax-free threshold and allowance would trigger inflation and the Dutch Disease, saying, “Where are these concerns of the government now that it has been forced to give the people more money?”
“We in the PNCR/APNU believe that our philosophy of putting people first and at the center of the development is not only morally superior but also a better economic development model,” the party added.
Last week, President Irfaan Ali outlined his “Vision 2030” to the National Assembly and announced several cash initiatives, including giving every household across Guyana a one-off GUY$200,000 cash grant this year. Distribution is expected to commence instantly.
Another fiscal measure announced by the Head of State is the payment to all public sector workers who will earn no less than GUY$100,000 monthly by the end of 2025, thereby increasing the minimum public sector wage to 100,000, with Ali indicating that this salary adjustment joins other measures the government has already pursued to adjust salaries for various categories of workers, thereby increasing their disposal income by more than one billion dollars.
Ali also announced a 10,000 tax deductible per month per child for one parent and that the government would provide a GUY$10 billion one-off injection into the National Insurance Scheme (NIS) to provide additional benefits to pensioners who are now receiving GUY$43,500 monthly.
He also promised Guyanese free tertiary education.
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