GMSA wants removal of VAT on electricity, excise tax on fuel

The Guyana Manufacturing and Services Association (GMSA) has presented a list of measures which should be taken into consideration during the Government’s preparation of the next National Budget.

Among the proposals made is for the removal of VAT on electricity and the removal of excise tax on fuel used in manufacturing.

The GMSA emphasized that tax measures introduced in Budget 2017 such as VAT on electricity continue to impact negatively on the manufacturing sector.

In a statement issued after the meeting with Finance MinisterWinston Jordan, who is currently engaging in budget consultations, the body proposed a list of measures covering key areas of taxation, energy, public procurement, hinterland road improvement and management, access to finance, and standards and regulations.

The GMSA decried a decline in performance of the manufacturing sector during 2018 and as such believes its proposals will see a turnaround if implemented.

According to the Ministry of Finance’s Mid Year Report for 2018, the manufacturing sector contracted by 2.4% primarily due to declines in the production of sugar and rice; light manufacturing also recorded slower growth compared to 2017, 1.2% as compared to 3 %.

The GMSA also called for a reversal of the policy transferring items from Zero Rated to Exempt, especially for items of export from the manufacturing sector, noting that the policy has affected the ability of manufacturers to reclaim VAT on inputs made for items for export.

Among the sectors which have been severely affected are wood processing and rice exports, the GMSA said.

The GMSA also pointed out that the steady decline in the sugar sector is cause for concern not only for its national impact but also the dependence of light manufacturing for inputs from the sugar industry – specifically molasses, and where there were instances of delays and unavailability in 2018.

It further proposed the provision of incentives to manufacturers utilizing local raw materials in their manufacturing processes, a greater share of public procurement for locally manufactured goods and adjusted/reduced tariffs for manufacturing entities based on performance thresholds.

It also asked for incentives for renewable energy options such as gasifiers to utilize biomass, e.g. in wood processing and agro-processing and support for packaging and labelling facilities for agro-processors.

In presenting its position paper for Budget 2019, GMSA President ShyamNokta noted that while the growth in the forestry sub-sector at the half year point to 18.1 % increase, “timber is now slowing down.”

The manufacturing body alluded to the deplorable condition of hinterland roads which has contributed to constraints in the industry.

Also representing the GMSA were its Vice Presidents Ramsay Ali, Ramesh Dookhoo and Glennis Hodge, along with several Executive Members.