THE TRICKLE DOWN BUDGET

Jan 19, 2011 Features / Columnists, Peeping Tom

Any budget in an election year is going to have a certain amount of goodies. That the election year budgets of the PNC regime were unable to offer adequate “sweets” to the populace because of the pernicious incompetence of the then ruling administration, should not detract from the lack of vision shown by the ruling PPP in this year’s budget presentation.
The increase in old age pensions, public assistance and the income tax threshold are not election-inspired measures. They are hardly inspiring and can be better described as lacking in imagination.
Every year there have been increases in pensions and public assistance, and it has been a consistent practice of the ruling administration to adjust the income tax threshold as a means of placing greater disposable income into the hands of low income earners, not realizing the absurdity that it now finds itself in when the income tax threshold is way above what most poor workers are enjoying.
As such, the increases in the income tax threshold will not benefit those earning below this threshold which amounts to the vast number of poor workers in Guyana, but will instead accrue to those whose earnings are above the now stipulated $40,000 per month.
The increase is nothing to shout about and works out to just above $1650 per month. This is certainly nothing to shout about when one considers that after eighteen years in power there is still no living wage and still no national minimum wage that covers all workers.
By increasing the income tax threshold, the government is avoiding offering an incentive to labour that can boost productivity. The government is unwilling to do so because it is beholden to the powerful private sector. To have instituted a minimum wage would offend the private sector. So instead, workers are offered a pittance through the raising of the income tax threshold, and the private sector gets a gift by taxpayers having to fund this increase rather than it being paid by employers.
What this means is that instead of forcing security firms and unscrupulous and exploitative businesses to pay their low level workers more, the State provides additional disposable income to these workers by raising the income tax threshold and placing $1650 more in the pockets of those earning below $40,000.
Raising the income tax threshold denies the vast majority of poor workers from paying taxes on their incomes. Every person should pay some amount of tax, however small. No one should be exempt from paying taxes. As such, a much better approach would have been for the government to raise wages and ensure that everyone pays some tax.
The 2011 budget is said to the highest in our country’s history. But if you break the numbers down, if you add what it will cost the treasury to increase pensions and social assistance and place this alongside what is being spent on public expenditure, the distinction becomes more glaring and reveals the anti-working class nature of this year’s budget.
How much is going to be spent on pensions? How much is going to be spent on social assistance? Add these up and then compare this with how much is going to be spent on public contracts, and a clearer picture emerges.
The 2011 budget is about the rich. Corporation taxes have been slashed, while only those earning above the present income tax threshold will enjoy the benefit of the increase in the threshold. Some companies are going to make millions as a result of the slash of the corporation tax.
How much will that security guard whom this newspaper featured a few weeks ago as earning $130 per hour earn from the increase in the income tax threshold? Without overtime, nothing!
So where is the benefit for the working class in this Budget? The answer, we will be told during the debate, will be in the billions that are going to be spent on education and health. But the rich will also benefit from this, will they not?
The philosophy of the PPP government is that by helping the rich we help the poor. The rich create jobs and keep industry and commerce going. Thus helping them helps the poor.
At least the government should be honest enough to admit that this is the approach it has taken to running this country, an approach that gives to the rich so that it can trickle down to the poor.

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