THE GHOST OF NICHOLAS KALDOR WILL HAUNT GUYANA
The Property Tax Act in Guyana was passed in 1962 as part of the budget proposals of that year on which Nicolas Kaldor, a moderate social democratic Cambridge University economist, had advised. The proposals were the most revolutionary of the era, described as a genuine attempt to solve Guyana’s economic problems, but violently opposed by the then opposition comprising the PNC and the UF. Some of the proposals, including the PPP government itself, did not eventually survive, but the property tax did, until this year, 2026, a total of 62 years, when it was abolished for individuals.
Fast forward to the present and the most persistent economic problem facing the developed world. Since the 1970s, it is the failure of wages and salaries to keep pace with the rise in the cost of living while the rich becomes richer and the gap between the rich and the poor increases. Sixty percent of Americans live from paycheck to paycheck. Capitalism had begun to falter; and the ruling classes in the developed world proposed that the reasons were the restrictions placed on the free market. The answer, they suggested, is to release the fetters on the market and allow it to plunder unhindered. It didn’t work of course. Like all of these innovations, neoliberalism was just a scam. The cost of living crisis got worse and the US electorate voted in Donald Trump to solve it. He’s now making it worse.
Many others in the West sought solutions by advocating, not fundamental shifts in the relations of production, but measures to curb the increasing gap between the rich and the poor which will also raise funds to finance development. Thomas Picketty, a French economist, (“Capitalism in the 21st Century”) demonstrated that income from investment was rising faster than wages and that the solution lay in a wealth tax. The call for such a tax had already been gaining momentum and since then has attained widespread appeal. These proposals for wealth taxes take many forms and manifestations. For example, the New York Mayor, Zohran Mamdani, has proposed a tax on second properties in New York that are not utilized by their owners. Guyana’s property tax is one of the earliest forms of wealth tax to be imposed. Why abolish it when more and more people are becoming more and more wealthy and poverty still exists in Guyana?
The motivations for reducing property tax in Guyana for individuals are not known. It could be that the income to the government from property tax from individuals is not adequate enough to makes it worthwhile to continue. No studies have been published, and no analyses have been advanced. The abolition has been presented merely as a populist measure to advance a political cause, namely, reducing taxes. But in a changing Guyana, where many are amassing fortunes overnight, my layperson’s perspective suggests that the property tax can continue to be a vital instrument in sustaining a modicum of economic justice. No one can dispute that reforms were necessary. Modest amounts imposed on homeowners should long have been abolished. Funds earmarked for investment should not be taxed. But no justification exists for allowing vast, unutilized or underutilized, resources to remain free of tax
There is another troubling reality. What kind of a society do we want to create? The kind described by workers yesterday at May Day rallies where they are living paycheck to paycheck, hardly able to make ends meet? Or one where the wealthy are not seen to be making a justifiably significant contribution to the national welfare? The argument that those who have their taxes reduced will invest the windfall and create jobs and are ‘wealth creators’ has long been debunked in the US. It is hoped that the symbolism of the abolition of property tax for individuals is not the latest manifestation of a transition of the Guyana society where the interests of the wealthy become dominant.
From Nicholas Kaldor to Thomas Picketty, the wealth tax has been advocated, and implemented, as a tried and tested method of reducing inequality and financing development. Picketty is alive and well and continues to advocate the same views with much more vigour. In severely weakening the wealth tax in Guyana, the ghost of Nicholas Kaldor will haunt us.
