Month: February 2008

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The Special Select Committee appointed to deal with the report of the Disciplined Forces Commission never reported

I spent Sunday morning visiting friends in Lusignan and the homes attacked in the massacre there. While I was moved by the accounts of devastation and grief and the tale of horror of those who lost loved ones, I do not pretend that I can fully appreciate the damage to the community and the trauma to the surviving close relatives. To put a father, mother and child on a sofa at 1.30am and shoot them at point blank range is something associated with the Nazis, not Guyana.

No doubt it was an act of unspeakable horror for Guyana and those responsible should pay for it. But the question is where does the responsibility end?

Since 1993, when Monica Reece was murdered and her body dumped in downtown Georgetown, citizens have been calling for action by the Government to stem the rising tide of lawlessness that was enveloping Guyana. Instead, we have since witnessed cycles of unsolved murders of a Minister of Government, a prominent media and African rights activist and hundreds of others. After each wave we are treated by the Government to the same banalities about what it will and will not do and from the opposition political parties to what the Government should have done but did not do. And there the matter would end until the next major round of murders.

Various reports such as the Symonds Report and the Disciplined Forces Commission Report were swept aside to make room for indicted New Yorker Bernard Kerik and a politically controlled and ineffective National Commission of Law and Order.

For these failed initiatives the President and his Government must accept inescapable responsibility. But they are not the only ones that are culpable. On May 16, 2003, the National Assembly set up the Disciplined Forces Commission (DFC) comprising Justice Ian Chang as Chairman, recently appointed Appeals Court Judge Charles Ramson, Anil Nandlall and Mr David Granger and Ms. Maggie Bierne of Northern Ireland who was replaced on her resignation from the Commission by Professor Harold Lutchman.

The Commission was required to “examine any matter relating to public welfare, public safety, and public order, defence or security, including the structure and composition of the disciplined forces and make recommendations generally with the view to promoting their greater efficiency and giving effect to the need in the public interest that the composition of the disciplined forces take account of the ethnic composition of the population!” The Commission handed in its report on May 6, 2004, almost four years ago.

It was a comprehensive document with some one hundred and sixty-four specific recommendations, many of which were then [and now] immediately implementable. But instead of action, the response of the National Assembly was to refer the report to a Special Select Committee with heavyweights like Mr Bernard De Santos as chairman, Ms Gail Teixeira and Mr. Doodnauth Singh from the government and Mesdames Clarissa Riehl and Debbie Backer and Messrs Basil Williams and Raphael Trotman from the opposition, all attorneys-at-law. That Committee met on ten occasions but never completed its mandate or submitted a report.

Strangely, the National Assembly did not revisit the matter again until July 26, 2007 (just remember the date for one moment) when it again passed another motion appointing yet another Special Select Committee to conclude the examination of the DFC Report. In the discussions on the July 26 motion, the most vocal critics of the government were ironically the opposition members of the first Select Committee, accusing it of tarrying while Guyana was burning from the heat of the criminals.

One of the opposition members even referred to the motion as a sad indictment of the National Assembly and the people of Guyana. How a trained attorney-at-law could find the failure by that body an indictment of the people of Guyana is surely a legal stretch but in its further confusion and dilatoriness, instead of treating the matter with the urgency it deserved, the National Assembly gave the Select Committee six months to come up with its recommendations on the recommendations.

Completely oblivious of the seriousness of their mandate and the deadline, the Committee on this occasion headed by Prime Minister Hinds and comprising Messrs. Rohee, Benn, Dr. Bheri Ramsarran, Bernard De Santos and Ms. Philomena Sahoye-Shury from the government and the same four from the opposition is yet to meet! I am therefore surprised at the statement attributed to committee member Debra Backer in the media that home affairs minister Clement Rohee is the chairperson of the committee since one would expect her to know such basic information.

Now for the significance of the date of the motion: the six months expired on the day the Lusignan Massacre took place!

At a minimum the failure of the National Assembly constitutes a dereliction of duty by all our Parliamentarians and Guyanese should accept no excuse for this gross incompetence but for which so many lives including the Lusignan 11 may have been saved. Mr. Trotman of the AFC has apologized on behalf of the politicians. To the dead and those close to them, such apologies are of course meaningless and for others the question is what next. Do the opposition parties not realise that their contribution to major crime events almost mirrors the Government’s React, talk and forget – until the next episode.

The Government bears primary responsibility for the management of the country but one of the functions of the opposition is to bring effective pressure to bear on the Government when it fails to do its job. Instead, like the Government they too seem to offer only blame and excuses.

Guyana weeps not only for those who lost loved ones but for ourselves for repeatedly putting our faith and our lives in the hands of an ineffective bunch of politicians. If after all of this we still accept facile excuses from the Government about the police, and from the opposition about the misuse of the PPP/C’s majority rendering them (the opposition) impotent, we as citizens will have only ourselves to blame.

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Kwayana did speak out

In a discussion on the Lusignan Massacre on the State-owned NCN, Minister of Home Affairs Mr. Clement Rohee lamented that he did not see Eusi Kwayana and other letter-writers to the media come out against the atrocity in Lusignan.

In fact Wednesday’s Stabroek News published Kwayana’s letter “There has been a string of atrocities coming one after another, from murder of a mother to civilians and soldiers. But none can compare with the cold-blooded Lusignan carnage of the innocent, as if some new Herod has ordered the slaughter of a new generation as part of some scheme of wild justice”.

If Mr. Rohee was honestly mistaken would it not have been proper for the programme’s host Kwame McKoy and the other panellist Dr. Leslie Ramsammy to correct the Minister particularly since they were all criticising what they saw as attempts to politicise the atrocity?

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The export allowance visited (continued)

Cost and benefits

Export allowances were introduced as an incentive for companies engaged in foreign exchange earnings, and looking at the countries where they are still available several years after their introduction, there must be some doubt as to whether they have achieved their objective. When the allowances were introduced in Guyana in 1988, the country was in desperate financial straights, the black market for foreign exchange was thriving and America Street was the dominant non-bank foreign exchange market. Things have changed substantially since then with the introduction of the Economic Recovery Programme by Hoyte and its faithful continuation by the PPP/C government. In other words the economic justification for the export allowance seems to have reduced substantially. Whether Guyana should have abolished it earlier would depend on those changing circumstances as well as an analysis of its contribution, its benefits and its costs.

Tax data in Guyana at sectoral or geographical levels are impossible to come by which would make tax policy formulation difficult indeed.

Who are the beneficiaries and to what extent does the economy benefit from the tax foregone? Such information simply is not publicly available, but from the legislation the furniture sector would surely be among the beneficiaries in respect of non-regional sales.

The direct cost of the allowance is the tax foregone against which we should consider whether the incentive was the real cause of the investment and whether efficient companies would not find it attractive to invest in, for example, value-added processing of what many consider to be among the best wood in the world, without both tax holidays and export allowances. What would be the justification for similar exemptions for shrimps and minerals (other than gold, diamonds and bauxite) which are in international demand, when the law already allows tax holidays of up to ten years, carry-forward of losses till eternity, initial allowances of up to 40% on qualifying plant and machinery as well as annual tax allowances? Anything more than those suggests that the beneficiary business is a state-financed venture in disguise.

In other words, other than for the beggar-thy-neighbour policies on tax incentives pursued mainly by developing countries, there may have been little justification for the generous concessions in the first place, concessions which detracted from the broader issue of generally high rates of tax. Instead of fixing the whole tax system we consolidated the high tax rates for some in order to give relief to others – a story replicated in so many other sectors of the economy.

Incentive rewards evasion

There are two other consequences of the allowance that are worthy of mention. The first is that it not only discourages sales to the domestic market which may not only have the same needs as the overseas market but helps to cover some of the fixed costs, therefore making the company’s export prices more competitive – a different issue from dumping.

The second in some ways stems from the first, but is also inherent in the system. Even where such a company serves the domestic market it has an incentive to ‘duck’ those sales by not bringing them into the books, thereby evading the tax which would have otherwise been payable.

Loss of respect

Guyana needs to encourage all its earners – workers as well as entrepreneurs. It can do so by enlightened policies that do not discriminate against those who can least afford it and in favour of those who can. As long ago as 1993, I presented a paper entitled ‘Tax Reform – A Vehicle for Economic Recovery,’ in which I pointed out the unjustness of the tax system and that we were ignoring the experiences of other countries in a blind pursuit of attracting businesses at any cost.

Just incidentally that paper was quoted extensively but selectively in the parliamentary debate on the VAT legislation. Not that we should underestimate the contribution of businesses in general or exporters in particular. But in relation to the export allowance, the example of Trinidad and Tobago would be useful more than just for the fact that their manufacturing has taken off since its abolition, which may only be part coincidence and part lower energy costs.

Accompanying the removal of the export allowance, that country introduced lower rates of income and corporate taxes and very directly granted 150% allowance for expenses incurred in export promotion. We should encourage exports but let us do so within good logic, fairness and international treaty obligations.

This particular column arose out of discussions on the private sector, its independence and willingness to look the government in the eye. If our entrepreneurs are unable to compete internationally without undue reliance on government and subsidies in areas where we have natural advantages such as rum, forestry and wood products, then their claim to being world class will be no more than empty boasts.