While he is sure no government sets out to hinder the progress of the poor and working class, former Foreign Affairs Minister and Economic Commentator, Dr Henry Jeffery believes Government needs to dig deeper to first quell the fear of the poor, by giving a clear understanding of how it intends to see economic growth during the new fiscal year.
Former Foreign Affairs Minister, Dr Henry Jeffery
Jeffrey was speaking to last Monday’s presentation of the 2017 $250 billion National Budget by Finance Minister Winston Jordan, and which has left sections of the population reeling in concern.
Part of the budget, which points to a two per cent reduction in Value Added Tax (VAT), also speaks to a 14 per cent tax imposition on customers who uses electricity in excess of $10,000 and water over $1500.
While Jordan reminded that the budget was intended to provide a “good life” for all, the former parliamentarian said there needs to be a thorough examination and retrospection.
“I believe that many of these things that he seems to be doing in terms of the VAT and others need to be better explained. His attempt to cut the Income Tax threshold will essentially cause rather than a progressive tax situation has created a regressive tax situation. He said most of these things need to be properly explained”.
Jeffrey said he is always concerned with economic growth.
“Last year, we saw him saying that economic growth declined by some 2.6 per cent and he is trying to take that to a 3.8 per cent next year. But we need to know what he is going to do to achieve that goal”, Jeffrey said, speaking about the Finance Minister.
Then there is the issue of the VAT being reduced to 14 per cent and he has also zero rated and exempted some items, Dr Jeffrey said. According to him, the question will now arise as to whether the producer will still have to pay the VAT on those items. All these things, Jeffrey said, have to be considered. “And then there is the issue with the water and electricity that everyone is up in arms about. He may make back the taxes from reducing the VAT. I don’t think that his intent is to bring added burden to the poor. The Minister needs to explain just how he has come to these rates regarding electricity and water.”
He continued, “Would it bring the sort of burden upon the poor as everyone is saying at this stage?. I don’t believe that anybody goes into a budget trying to do that kind of a thing and so he therefore needs to explain,” Jeffrey told Guyana Times.
He recalled that last year, Government spent less than it budgeted in terms of Capital works. He said now it has spent about $8 billion. He said while Capital Works can help Gross Domestic Product along the way, Government must hope that it also spends the amount of money it has budgeted for this year, if it is going to get that level of economic product.
“Essentially, my concern is about economic growth and how the budget affects the poor. I think that that is his intention, but in the things I pointed out, I thought that the richest people, those working for more than a million dollars and are getting benefits, paying less tax to over 400,000 a year… Maybe that it is his intention”.
Dr Jeffrey said there should be no added burden on the poor by imposing such rates on electricity and water.
“I believe that he needs to go and check this out more, he needs to be very clear about these things, he might have to look at again, but they certainly need explanation in terms of how will they affect economic growth, how these taxes will not affect the ordinary working people,” Jeffrey told this publication.
