Internal issues #2: Export taxes

The data reviewed above show that Guyana imposes taxes not just on imports, but also on exports.

These are a legacy from an earlier era in which it was hoped that imposing taxes on the export of primary products might create an incentive for the local production of value-added goods. The export taxes are provided for in the First Schedule, Part 1 of the Revised Common External Tariff of the Caribbean Community. That schedule explicitly exempts manufactured articles (other than those provided for), and sets the following rates:

• Precious stones other than cut and polished: G$3.00/carat

• Bauxite: G$0.45/tonne

• Unrefined cane sugar: G$1.00/tonne

• Molasses: G$1.00/100 litre

• Greenheart, round piling and hewn: G$0.29/cubic meter

• Greenheart, sawn: G$5.09/cubic meter

• Aquarium fish: 5%

• All other (non-manufactured) articles: 1.5%

This is a subject to which we will return in Part V. While it would be unwise to undertake a revision of the import taxes without first conducting a comprehensive national debate on the fiscal consequences of the new oil wealth, and also taking account other aspects of these taxes, the case for repealing the export taxes is so strong as to require no such review. Striking them from the books will eliminate a disincentive to exports while having close to zero impact on government revenues. Doing so would not mean giving up a stimulus to downstream products, as they are set at levels far too low to play a meaningful role in any business plan.

I. Internal issues #3: The processing of imports and exports

As was discussed in Part III, Guyana does not score as well as it could on such comparative measures as the World Bank’s Doing Business indicators. The country has an especially unenviable ranking when it comes to the “trading across borders” component, where it beat only one of the 19 countries used as comparators in this strategy (see Figure 15, Part III). The reason for that poor ranking is shown in Figures 22 and 23, which report the World Bank’s calculations of the amount of time and money required to comply with the border documentation that countries require for imports and exports. Guyana’s worst performance in the Doing Business data is its score on “time to import” and especially “time to export,”

where compliance is vastly more time-consuming than in other countries.

These numbers are the trade policy equivalent of a self-inflicted wound, and reform in this area could be the single most significant step that Guyana can take toward enhancing its competitiveness in the global economy. There are some reforms now underway that may alleviate part of the paperwork burden imposed on importers and exporters, starting with the implementation of the Trade Facilitation Agreement and the

Figure 22. Time required to comply with border documentation (hours)

OECD High-income Suriname Haiti Trinidad and Tobago Latin America and Caribbean Jamaica East Asia and Pacific

Guyana

0 50 100 150 200 250

Time to import Time to export Source: World Bank Doing Business data at https://www.doingbusiness.org/en/rankings

Note: The time and cost for documentary compliance are those needed to obtain, prepare, process, present, and submit documents that are required for imports or exports

Figure 23. Money required to comply with border documentation (US$) OECD High-income

Suriname Guyana Jamaica Haiti Latin America and Caribbean East Asia and Pacific Trinidad and Tobago

0 50 100 150 200 250 300

Cost to import Cost to export Source: World Bank Doing Business data at https://www.doingbusiness.org/en/rankings

Note: The time and cost for documentary compliance are those needed to obtain, prepare, process, present, and submit documents that are required

assistance that UNCTAD is extending for full implementation of the Automated System for Customs Data (ASYCUDA) system. These twin steps will carry multiple benefits, the most important being significant reductions in the time and money required for traders to comply with Guyana’s border formalities. The full implementation of ASYCUDA may also produce much more user-friendly statistical data for policymakers, private sector analysts, academics and other stakeholders. Other important reforms are at various stages of development and implementation, including a single-window program and the implementation of a better risk-management program for the targeting of customs inspections and — with support from the International Trade Centre — establishment of a Trade Information Portal.

While those reforms may produce major results not just in Guyana’s Doing Business rankings, but indeed in the business that actually gets done, there are further reforms that ought to be considered. Perhaps the most important of these, concern not the more efficient processing of the paperwork now required for imports and exports, but more fundamental consideration of whether the additional paperwork required under other laws still serves a useful purpose. One systemic source of delay is a set of outdated laws by which other government agencies are given authority to block trade in certain products or categories of goods. Automatic and non-automatic import licences are required for numerous products, as governed by (among other statutes) the Trade Act (2012) Cap 91:01 and the Official Gazette (1996). Prior to applying even for an automatic licence, importers must obtain either the endorsement or a no-objection permit from the relevant sector-specific authorities. These authorities variously include the Guyana Rice Development Board, the Guyana Sugar Corporation and the ministries of Agriculture and Health, among others. Even though under normal circumstance these licence applications are processed within 48 hours, they still constitute a barrier to trade that may crimp the operation of exporters both directly (by delaying their shipments abroad) and indirectly (by delaying their access to imported capital goods and supplies).

Some of these requirements are quite obviously anachronistic. Consider the rule by which imports and exports of petroleum products are subject to no-objection determinations by the Guyana Energy Agency (GEA). This authority stems from laws that predate independence by a few years, and the discovery of oil by more than a generation.⁵⁴ Other laws affect the movement of goods that might have important implication for human health or environmental quality, such as pesticides, plant diseases, heavy metals and other hazardous substances. Not all of these authorities are as obviously outdated as the one granted the GEA, but they each contribute to the general slowdown in exports and imports. All of them merit a close reexamination.