Budget thoughts – commentary

Budget thoughts – commentary

Stabroek staff – April 9, 2012  Editorial

For the average struggling Guyanese,  the most noteworthy announcement made by the Minister of Finance, Dr Ashni Singh in his budget presentation would have been the lifting of the income tax threshold substantially from $40,000 per month to $50,000 per month.  For those earning under $50,000 per month it is a significant addition to take home pay even if not enough.

In terms of the heavy tax burden faced by the average Guyanese the raising of the threshold may be seen as just a sweetener to try to mask the bitter pill of the 16% VAT. This tax continues to rake in billions for the government on the backs of the overtaxed while there are valid concerns that those with much greater ability to pay taxes in the business community and elsewhere are escaping with much less than their fair share of the tax obligation. 

The public now waits to see whether President Ramotar’s promise of comprehensive tax reform will yield recommendations which will give impetus to several reports that have already been presented and which will lead to a fairer tax load and even more people in the tax net. There is however no word as to when his three-person panel convened shortly after his December, 2011 swearing in will deliver.

In the same section of the budget speech as the tax threshold was the government’s offering to the aged and those in need of public assistance. These adjustments were quite embarrassing if one was to consider the sumptuous arrangements that former President Jagdeo engineered for himself before leaving office. Public assistance of $5,500 has been increased to $5,900 per month with effect from May 1, 2012 –those who need it can’t even benefit from this paltry adjustment until May whereas President Jagdeo was eligible to collect from the moment he left office – reputedly to the tune of over $3M per month when all benefits are costed. Old Age Pension of $7,500 per month will rise to $8,100 per month but again this won’t take effect until May 1st.

And while the budget speech referred to measures that are being taken to help vulnerable groups from children to single parents there was no discussion whatsoever of the state’s Poverty Reduction Strategy Programme. Has it been abandoned? While programmatic interventions such as school meals, uniform assistance and loans for single parents might help they provide no real gauge of the depth and extent of the poverty problem and whether it is remediable.

How many families for instance are living in extreme poverty – not able to send children to school because they can’t afford clothes or two meals a day? How severe is this problem and in which parts? Governments have to be acutely aware of and sensitive to the most vulnerable families and to chart how they can be helped in a comprehensive way. For many years the government has been urged to do detailed poverty mapping. Send out social workers to find the most vulnerable families and track how they fare through various interventions.  Quite often these families are under severe stress as a result of substance abuse, sexual abuse, mental health breakdown, other chronic illnesses or ostracism. The pat solutions don’t work in these cases. Each week the toll of such families become evident but only when the circumstances rise to the level of tragedy like that of the killing of a baby amid the drunken row of its parents. Otherwise, these families live wretched lives daily and endure cycles of great need and disaster until the inevitable occurs.

This government and the one that preceded it have cumulatively had around 25 years trying to assess how well poverty alleviation programmes have worked, going all the way back to the PNC’s Economic Recovery Programme and its IDB-funded safety net, the Social Impact Amelioration Programme.  Yet, there appears to be no compendium of distilled wisdom from these costly programmes accompanied by generalized prescriptions for dealing with entrenched and cross-generation poverty. Money has been spent and that’s it. The poor, it seems, only exist to be statistics to be opportunistically plucked or to rise to the surface in the sharp relief of pain, tragedy and humiliation.
Another  train of thought in the Minister’s speech worthy of comment is his declaration that “The next five years also present us with the very real prospect of realising the first major wave of large scale diversification of our economy, with emergence of new sectors, such as environmental services, petroleum products, previously untapped minerals, information and communication technology, and tourism, all poised to become significant contributors to national output, creating jobs, and generating incomes and wealth for our people.”

This statement presented a tacit admission – that notwithstanding 12 years of the Jagdeo hype – the Guyana economy remains rudimentary in many ways and there has been no large scale diversification of the productive bases despite the 20 years of uninterrupted PPP/C governance.  The traditional primary products economy remains even while sinking into deeper problems and uncertainty – sugar being the prime example. Even while the government gushes about economic transformation, the burgeoning extraction of minerals, old and new, leaves the economy in the same moribund pattern of primary production with no structured development of the value-added sector. The statement by the minister is an indictment of what has passed since 1992 for management of the economy.

The minister also blithely refers to this economic transformation creating jobs. It is definitely the case that jobs are desperately needed and that the level of employment and underemployment here is severe.  The Finance Minister made no pledge about overall job creation though he was keen to contend that the ICT sector has already created 3,000 jobs and in the near to medium term there is the potential for a further 21,000. This projection in addition to the pledge of at least a thousand more jobs for Linden should be tracked and publicized by the administration.

For the first time, in the last 20 years, there is a real prospect that the minister’s speech will be voted against in Parliament.  That will be seen as a flexing of the political muscle of the opposition. What will be crucial, however, is how the minister reacts to opposition appeals for adjustments to the estimates of expenditure when these come up for consideration. Will he be prepared to provide the requisite information to assure them of the appropriateness of the outlays? His disposition towards the questions of the opposition will in large measure determine how successful his projections will be for the rest of the year. Interesting times are undoubtedly ahead and both the government and the opposition must do their utmost to ensure that  this year’s budget is responsibly handled.

(Note: $1US is equal to approximately$200 Guyana dollars)

— Post #1290

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Comments

  • rafeena35@live.com  On 04/13/2012 at 6:23 am

    Wow you said it all! Perfectly! Guyanese are very forgetful people don’t matter how much they suffer they will not come out to fight for their rights. $400.00 omg that is so bad wow how can any person stand there to tell poor people you will benefit from us with a $400 increase! 2 proper bottle of water to drink is $400 these politicians are worst than animals! They grab the best then leave the scraps to the poor!

  • Cyril Balkaran  On 04/15/2012 at 8:09 pm

    The Budget of any country is a measure of the Fiscal Policy the Government hopes to utilise in order to govern the nation for that period of time. This budget is critical because some horse trading is anticipated due to the parliamentary configuration of numbers. In all seriousness the failure of the Budget is the failure of the Government. A responsible Opposition will negotiate to allow good sense to prevail in the interest of the Country. Do not forget in 1962, how the Kaldor Budget of Finance Minister Charles Jacob Jn.invited mass street protests, an 80 day old general strike and finally the arson, riots of Feb.16th 1962. We must act reasonably if the Government has to come back in 6 months with another fiscal package, but do not disrupt this government. The elements of true Nationalism are steeped in patriotism and statesmanship. Let us get our act together and serve mother Guyana first. Hats off to our National patriots who sit in the National Assembly.

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