Efforts must also be made to change the perception of the Guyanese people that their future lies outside of the country's borders. (Global assessing agencies rank Guyana above only Haiti on the poverty table of Latin America and the Caribbean).
Strong censure of conditions and practices in the Guyana system has come in the June issue of the monthly Guyanese Online newsletter, of which Cyril Bryan is editor and publisher, that lamented the continuing hemorrhage of Guyanese brainpower and expertise to the developed countries, which it blamed on very low salaries and wages.
Making itself attractive to private investment was seen as the best way to ensure accelerated economic growth.
The article remarked: “The first requirement is the solving of the racial divide, which is now used for economic/political advantage. The second is the reduction of government controls and the restrictive policies seen in uneven taxation and discriminatory practices when they are applied.”
Politics in Guyana have for more than half a century been pursued largely along racial lines, involving the two major segments of the population: Guyanese of East Indian and Guyanese of African descent.
The newsletter noted that while the country has been recording growth in recent years – the Caribbean Development Bank shows Guyana among six of its 18 borrowing members to register growth in 2010 – the growth was coming from a fragile base. Guyana is continuing to borrow at an unsustainable level. Expenditures outstrip income by over 30 percent. Agriculture, mainly sugar and rice for export, continue to underperform.
The global surge in commodity and metals prices has had a considerable impact on the Guyana gold industry but it remains badly regulated and thus earns much less for the state than it should. The newsletter commented: “In both 2009 and 2010, it was reported that gold mining earned more export revenue than sugar and rice combined. This means that monitoring must be further strengthened in the gold mining industry to ensure that declarations are made and taxes paid, since Brazilians now control most of this industry. Gold production was up 27 percent to 317,316 ounces in 2010, the highest ever.”
The newsletter underscored serious weaknesses in Guyana's administrative system which needed to be addressed urgently:
• Taxation: Tax avoidance and tax evasion are standard … There is a large underground economy estimated at more than 50
percent of business transactions. There is also the smuggling of goods from Venezuela (mostly oil and beer), Suriname and Brazil. The borders are porous and all attempts to control smuggling have failed. Most of all, the bribery of officials is reflected in the discriminatory implementation of the laws to their personal benefit, as the Customs Department is riddled with corruption.
At present, Customs collects only G$10 billion – or US$50 million – a year. For some, Guyana is already a duty-free zone and they are getting rich, as they hold a competitive advantage on those who pay duties. The solution is to scrap the duties on all goods coming into the country and make Guyana a duty-free zone. Trade would explode, the country would attract regional and international investment and the ingrained corruption in the Customs department would be largely eliminated.
The Value Added Tax should be replaced with a sales tax on all businesses.
• Company Taxation: Recently, taxation on company profits has been reduced but they are still 30 percent to 40 percent. High taxes on profits are usually not reflected in high taxes collected. Companies move their profits and assets around to avoid taxation. Use the flat tax on all worldwide sales similar to that applied to offshore business companies.
It said such systemic adjustments would increase investment in Guyana and lessen the government‘s stranglehold on the economy.
In fact, there is need for the abolition of the Guyana currency altogether and an agreement with Washington for use of the U.S. currency locally. Guyana’s population is consistently under the crush of big numbers in their daily lives, because the local dollar has little value (less than half a cent U.S.).
At the marketplace, the price of a single mango is quoted in ridiculously high figures that really mean little. Newspaper headlines frequently scream outlandish dollar values for what appear to be minor government projects.
People in Guyana are beginning to toss away low-value bills as Americans toss a penny. Yet a considerable sum in foreign exchange is constantly paid to have enormous quantities of relatively valueless currency notes printed abroad.
Guyana should abolish the national currency and seek an arrangement with the American authorities to adopt the U.S. currency for domestic transactions – until some distant time when [the Caribbean Community or CARICOM] comes to terms with its own fragility and agrees on a common regional currency.
The immediate impact of using the U.S. currency would be that the showroom price of everything – salaries, too – would seem to fall by a factor of at least 200, coins would again matter in people’s normal daily transactions and simple arithmetic would become simple again.