Dear Editor:
The ExxonMobil Petroleum Agreement purports to provide Guyana with 2% royalty commission and 50% of the profits. At the upper-cost ceiling of 75%, Guyana is expected to receive 12.5% of the oil revenues. With Exxon’s discovered eight billion barrels plus a projected additional find of two billion barrels, Exxon is expected to produce and sell ten billion barrels. This will yield $600B at a current price of $60 per barrel.
Thus, Exxon’s and Guyana’s shares of the net profit would be $75B each. Exxon gets its $75B tax-free. If Exxon were to pay corporate income tax at 20%, Guyana would have received an additional $15B. In other words, Guyana loses $15B.
The careless way in which the Agreement is drafted not only denies Guyana of revenues but also facilitates potential international tax evasion.
Article 15 of the Agreement provides that no tax, value-added tax, or duty shall be levied in respect of incomes derived from the Petroleum Operations or any property held by the Parties. At a conservative estimate, Guyana is being deprived of another $5B in value-added tax and duty and capital gain taxes. This Agreement has the potential for causing Guyana to be mired in one of the largest international tax scandals.
The Agreement states at Article 15.5 “…The Minister shall note that he is paying the income taxes on behalf of the Contractor, so that the Commissioner-General, Guyana Revenue Authority can properly prepare the receipts required under this Article 15.5”.
The activity is evident here; Exxon pays no income tax, but the Guyana Revenue Authority will issue a receipt that shows that Exxon has been issued with an Income Tax Assessment that has been paid. It is left to speculation as to what purpose this receipt will serve. One such use is to avoid double taxation in other taxing jurisdictions. This arrangement is fraught with contentious legal implications. Is Guyana aiding and abetting international tax evasion?
The more immediate question is: under what law and authority is the Minister authorised to pay the Contractors’ Tax Assessments and the Commissioner-General of Guyana Revenue Authority authorised to issue a tax receipt for taxes purported to be paid but not actually paid?
I am unable to find any law of Guyana, including the Income Tax Act and the Corporation Tax Act that permits these actions.
The Minister and the Commissioner-General run the risk of acting contrary to law and may be held personally liable for damages to the Guyanese people, in addition to criminal charges.
The big picture of this anomaly in the Agreement is that the Contractors are not paying any taxes, but they are being assessed for income tax, and they are given receipts evidencing that the tax is paid. In addition, there is no law or legal authority to permit these transactions. Does this render some or all of the taxing clauses in this Agreement void?
Given the seismic impact of the taxes and revenues involved, does this go to the root of the Agreement and renders the whole Agreement void ab initio? This exposé represents just one aspect of the many perils of the Guyana-ExxonMobil Petroleum Agreement.
In the interest of a clean and healthy relationship between Guyana and the Contractors going forward, I am proposing that this Agreement be revisited and revised to produce a fair, equitable and legally binding Agreement.
Tameshwar N Lilmohan, Toronto |
Dear Editor:
Guyana is a very deeply divided nation. Anyone who states otherwise is fooling the population or does not understand our politics. Will the March 2 elections solve our ethnic problem in which half of the nation is excluded from decision making and by extension resources and handouts of the government? The ‘winner takes all’ political system has not and will not solve our racial politics or bring people parties together to facilitate economic development. For over sixty five years, the country has stagnated or failed to reach its full potential under this failed system of winner takes all. It is time to try some other political system in which power is shared by all elected parties.
With the election campaign in full swing, voters are polarized as ever. Racial tension is very high; violence is on the rise amidst fear mongering. Some speakers resort to ethnic appeal with a few uttering prejudicial stereotypes against others. So the elections will not bring a solution to racial conflict. And no party is attracting significant cross-racial support to make it truly multi-ethnic. In fact, the country faces a serious challenge to hold free and fair elections as a result of racial tension and ‘racialized’ (though not necessarily racist) parties. The fear of ‘rigging’ is widespread among voters.
Post elections, the ethnic problem will persist. And so will be the challenge to maintain political stability and accommodate rival ethnic groups in the distribution of resources and jobs, both of which will seriously impact on the economy as has been the case since the 1960s. So post-elections, Guyana will still continue to fail to realize its full potential.
So what should be done to ameliorate the ethnic tension and conflict in the society and lay the conditions for growth and development? Regardless of which party triumphs in the elections, it should immediately set about to construct a new constitutional arrangement that grants the varied groups (via their elected representatives) a share in governance in accordance with the proportion of votes received. In short, there should be some form of power sharing among all elected parties. No ethnic group and its representatives should dominate the government.
The talk that a party is multi-ethnic and representative of all groups is just that – all talk, not reality. Although a party may receive support from several groups, as indeed is the case with most parties, the leadership of a party is dominated by members of a larger group and most resources (when in power) also go to the members and supporters of that larger group. Members of the other (smaller) groups or from the ‘defeated’ group are mere tokens in the pawn for dominance by the larger group. This type of politics must come to an end immediately post-elections replaced by one in which all ethnic groups feel they are part of governance.
All parties now in the electoral fray should commit to power sharing in which elected rep of every group is included in governance in accordance with its electoral strength as happens in places like Switzerland, Belgium, Northern Ireland, etc. There should also be some kind of decentralization of power and cultural autonomy backed by a relatively equitable distribution of resources for the groups. Such a formula or constitutional reform will help to lessen ethnic tension, bring stability, promote better governance, and reduce corruption. It will create the minimum conditions for long lasting growth, peace, and development. In the long run, the country will be better off than the current winner takes all political system that excludes half the country based on political affiliation and ethnicity.
Vishnu Bisram (PhD), New York
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