December 14, 2017

Challenges of Budget 2018

Budget time has come again and the honourable Finance Minister will soon present his budget to Parliament. The Minister has declared there would be no new taxes and this is of course a welcomed statement, since the population is already overtaxed and further taxes would have helped to destroy the country’s economy with even greater speed and cause great sufferings to the poorer sections of the population.
If the main point of the budget is to impose no new taxes for 2018, it would be sterile as the omissions and commissions of the last budget would still remain.
To be constructive, the budget must restore at least some of the social benefits which had been removed. These benefits must include the subsidy of Gy$30,000 per year to old age pensioners to help pay their electricity bills and the subsidy of Gy$11,000 to help them pay their Guyana Water Inc bills. When these two subsidies were removed, it caused great resentment against the Government. To restore these subsidies would therefore be a very popular measure. There are other areas of social assistance the budget could present. Such would include assistance in telephone bills and even food subsidy to those who are differently abled.
Equally popular would be the restoration of full allowance to children and also the Gy$10,000 per annum subvention per school child. The Education Tax which led to universal denunciation when it was imposed should also be removed.
The Value Added Taxes (VAT) should also be reduced across the board. To do a piecemeal reduction would cause more confusion and resentment.
Most importantly, the Ministry, even at this late hour, should seriously consider how the budget could be an instrument of generating wealth. The easiest way for the budget to be such an instrument is for the Ministry to immediately meet the Private Sector in good faith and listen to their requirements and advice.
At other times in the past, governments have spoken with Private Sector representatives but had given very little heed to either their requirement or advice. The Private Sector is the engine of growth and the generator of real wealth. There are certain taxes the sector has been calling upon Government to reduce or abolish, such as the Corporation Tax and it will be well for the budget to address these concerns.
The Private Sector could help Government by pointing out how to make more efficient and effective Government departments responsible for financing businesses, such as the Customs and Excise Department and Go-Invest.
The entire financial structure needs to be quickly reviewed and the Ministry – and by extension the Government – must address certain questions like the balance of payments and value of the Guyana currency.
The Government may feel if it reduces taxes, then the Treasury will not have funds. We are of the opinion that if the financial tax reforms adumbrated by the Private Sector were carried out, the improvement and growth of the economy would result in Government having enough funds to cover any shortfall the Finance Ministry may suffer in the short-term.
One of the major concerns of Guyanese society is the unemployment of young people. Many graduates from the University of Guyana are bright and able but cannot find employment, even jobs below their capabilities and training. Those who are able to try to immigrate add a great damage to society. Other young people with primary and secondary school qualifications and even some technical skills cannot find work though they try to day to day. If the budget could make an attempt to successfully remedy this issue, it would be one of the greatest budgets ever presented in Parliament.
If the Ministry had the perspicacity and courage to realise that if it restored the social services grants and took the advice of the Private Sector, the 2018 Budget would be the best so far put forward by this Government.