CUTTING THE BUDGET IS A MISPLACED STRATEGY

Apr 01, 2013 Features / Columnists, Peeping Tom

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APNU’s openness to talks on the 2013 Budget is a welcome development. There will have to be talks if the Budget is to be passed and APNU must appreciate that the government prefers to table the Budget and then negotiate rather than negotiate first and then table the Budget.
This approach actually strengthens the hand of the opposition and allows it, as was the case last year, to wrest considerable concessions from the government.
What spoiled the proceedings last year was the stance adopted by the Alliance for Change. APNU led itself into a trap last year when it opted at the twelfth hour to join forces with the AFC who complained that they were being left out of the Budget talks.
APNU brought the AFC to the bargaining table and while they were seemingly joining ranks, the AFC was undercutting APNU’s support in Linden. This caused APNU to panic, and not reach an agreement with the government. The result was tragedy in Linden.
This year the AFC is again threatening to cut the Budget – a power it does not possess. APNU seems once again to be allowing itself to be tugged along by the tail by the AFC. APNU is joining with the AFC in contending that it does have the power to cut the Budget.
If this approach continues, both of the opposition parties will fall into the noose set by the government. The government knows that APNU and the AFC will suffer a political backlash from the public if the parties attempt deep cuts to the Budget.
The government has pushed the Budget to the $200 B mark in order to offset any cuts that are likely to be attempted. Even if the opposition chops $40 B this time, it will not affect the government’s spending priorities because the government can effectively achieve economic growth with under $150B. But any cuts in excess of $20B will be fodder for an anti- opposition propaganda assault by the government, as was done last year when the opposition was labeled as anti- development, vindictive and seeking to put workers out of their jobs.
Cutting the Budget is a misplaced strategy because the government will go to the courts and have the cuts restored. And even if the cuts are not restored, the government can still spend in excess of what was appropriated and find cover in the law and there is nothing that the opposition can do about it afterwards.
The better strategy would be to negotiate concessions from the government. But in this regard, APNU needs to appreciate that it is acting from a different class interest from that of the AFC. As such, APNU is not likely to be on the same page with the AFC when it comes to what needs to be negotiated.
There is still time of course for both parties to come with a common proposals but the experience would advise that it would be much better if APNU determines what it wants and allow the AFC to decide whether it will support these positions.
APNU therefore has to undertake a deep analysis of the Budget. Unfortunately, the analyses conducted on the Budget have left much to be desired. It is hard to fathom what was meant by the description of the Budget being “bland”. Sex can be bland but can a Budget be bland?
It is also hard to understand how the Budget can be seen as a continuing circus. These sorts of positions really do a disservice to those who advance them and if this is the posture that is being adopted it is hard to see how useful proposals can be offered during any negotiations between the government and the opposition.
Other analyses on the Budget, as they often are each year, amount to more description and explanation. No one for example has seen through the tax measures that were announced by the government.
This may be a useful starting point for the opposition parties as they seek a compromise with the government to allow for the safe passage of the Budget.
The Budget offers a threshold on property tax for individuals of $40M. This means that no property tax is payable on property worth forty million or less.  Has the opposition asked itself why the threshold was set so high? Which poor person in Guyana owns property worth $40M? Which poor person in fact owns property to the value of the existing threshold of $7.5 M? So why is the government proposing this change in the threshold?
Is it because a number of government officials and their friends and cronies have recently constructed mansions and would benefit from not having to pay property tax or pay at a greatly reduced sum? How about the opposition asking that the threshold be reduced to $10M rather than $30M so that the poor and ordinary citizen can be the prime beneficiaries and not the nouveau rich and middle class, some of whom are also within the opposition camp?
Also why is the government proposing to offer interest relief for mortgages up to $30M? Why $30M? Which poor person can afford to take a mortgage for anything more than $10M? So why is the working class PPPC proposing interest relief on mortgages up to a $30M ceiling? Is it so that some of the friends of the government who have built splendid properties can write off from their taxes a significant portion of their interest payments on the loans they have taken to build these expensive properties?
These are the issues that APNU should be concerned about, not about cutting the Budget. It should negotiate lower ceilings so that what may seem to benefit the poor does not benefit the rich more.
This however requires that APNU decide where it stands. Does it stand with the working class or does it stand, like the AFC, with the middle class? And will it be prepared to break ranks with the AFC in having these thresholds reduced so that the middle class does not benefit more than the poorer classes.
Will it be willing to reduce the thresholds this considering that some of the leaders in the opposition camp also stand to benefit from the proposed high tax thresholds?

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