Though the 2020 budget is being presented near the end of the third quarter of the year, Minister of Public Infrastructure and Finance, Bishop Juan Edghill noted during the presentation of his maiden budget that much expenditure would have been accumulated in the first half of the year to ensure the continuation of multi-year projects and programmes, and provision of public services in the middle of the COVID-19 pandemic. With this in mind, Minister Edghill disclosed that the size of Budget 2020 is $329.5 billion, which is 9.6 percent, or $28.8 billion, above that of 2019.
In 2020, Minister Edghill noted that Central Government‘s current revenue is estimated at $226.5 billion, 5.9 percent or $14.1 billion, below 2019 collections, as a result of lower anticipated collections from both tax and non-tax revenue sources. In this regard, the Finance Minister noted that tax revenue, in 2020, is estimated at $214.5 billion, $11.4 billion less than the $226 billion collected in 2019. This is on account of reduced economic activity and the introduction of measures by the Guyana Revenue Authority (GRA) to reduce the burden on both businesses and individuals, amid the COVID-19 pandemic.
In light of the COVID-19 tax relief measures, which included the extension of critical deadlines and waiver of value-added tax (VAT), duties and excise taxes on some goods and services, Edghill noted that GRA revised the 2020 estimated collections. The Authority’s revision included: 1) lower expected collections from self-employed income tax and corporation tax on account of reduced profits from current year basis, and deferred payments owing to the deadline extensions; 2) reduction in estimated collections from travel tax and travel voucher tax due to international travel restrictions; 3) lower collections of VAT as a result of reduced remittances from utility companies and reduced economic activity; and, 4) reduction in estimated collections of excise tax on petroleum products owing to low worldwide prices for fuel and increasing exemptions to major companies.
In light of the foregoing, Minister Edghill said that the expected decline in tax revenue could be attributed to lower collections from three divisions: excise tax, customs and trade administration and VAT. It was further noted that excise tax collections are projected to decline by 26.9 percent, or $11.8 billion, in 2020, largely as a result of lower collections from the importation of petroleum products. Customs and trade taxes are also anticipated to decline by 9.6 percent, or $2.4 billion, mainly as a result of a 10 percent, or $2.2 billion, fall in collections from import duties due to lower economic activity amid the pandemic and protracted General and Regional Elections.
Guyana Standard understands that a much smaller decline is expected in VAT. This tax type is projected to decline by 0.1 percent, or $57.7 billion on account of lower collections of VAT on imports. Unfortunately, the anticipated 47 percent and 14.3 percent increase in withholding tax and PAYE collections, respectively, will not be large enough to offset declines in the other tax divisions.
With regard to non-tax revenues, Minister Edghill said this is projected to decline by 18.3 percent, or $2.7 billion, to reach $11.9 billion in 2020, on account of lower collections of rents and royalties, fees, fines and charges, special transfers and Bank of Guyana profits. These revenue categories are expected to decline by 27.5 percent, or $1.3 billion, 38.1 percent, or $610.2 million, 17.2 percent, or $500 million, and 21.6 percent, or $405.8 million, respectively.
With respect to Central Government’s total expenditure, Minister Edghill said that this is expected to increase by 13.4 percent to reach $320.3 billion in 2020, when compared with 2019. He explained that this position is mainly the result of anticipated expenditure for COVID-19 relief, and a growing Public Sector Investment Programme.