The Coalition’s problems on account of VAT are going to get worse

Apr 02, 2017 Letters

Dear Editor,
What is really amazing is that protests have been successfully organized against the parking meters affair and VAT on private education but no such efforts have been placed behind the immediate bread and butter issues affecting the entire nation, the VAT on water and electricity. Admittedly, the poor are exempted from the direct application of this tax, but they will have to bear the ultimate burden of its imposition as businesses raise their prices to recover costs associated with paying VAT on these inputs. It is entirely possible that businesses will roll back their cost increases once VAT on water and electricity are removed.
But within the context of all of the hullaballoo generated over VAT and the parking meters, the real tragedy is that Granger doesn’t understand enough of economics to know that Jordan has flushed the PNC/coalition down the toilet with the 2017 budget. Worse, his advisors are turning out to be either yes-men or completely daft about the implications of the VAT policies in the budget. How can anyone make a decision when they can’t see or understand the problem? To compound all of this, enough discussions have been made available in the public domain to facilitate clarification on the issues, but this matter has apparently moved beyond the professional to the personal, a showdown between the Minister of Finance and the Opposition to see who’s the boss.
The Finance Minister apparently carries some bad blood, over being canned by them, and intends to make his point while the population suffers. The Private Sector understands the situation clearly, but aren’t willing to play ball with a hardhead. So the Coalition’s out, but doesn’t know, or doesn’t want to ‘fess up and change. Granger’s inaction will bury the economy and his government. The country pays for his ignorance, which is what it really is, not to mention his inability to recognize his gross limitations. As the saying goes, you’re a wise man until you open your mouth.
The stark fact is that the Coalition’s problems on account of VAT are going to get worse because the budget has pitted the government against the entire country. The great Brigadier Granger has engineered his government and himself into a siege. The Private Sector with whom the government was supposed to be collaborating has recognized the futility of dealing with the Coalition and the Minister of Finance as its point man. They have buckled in for the long haul and are looking forward to 2020 as they navigate the well-known territory of inflation and eroding exchange rates.
Granger has to think about surviving 2020 if he wants his Party to survive at all, because there is no Burnham after him to hold the PNC together. If going down is not an option, then some policies and/or bodies have to be put on the block. More than this, there has to be some tactical engineering to regain the confidence of the Private Sector. What is clear is that the Finance Minister, who has been baptized Mr. Ludicrous by a blogger because of his 2017 budget, isn’t worth his salt. The question now is how to get rid of Mr. Ludicrous? How do Guyanese convince the Coalition that Mr. Ludicrous isn’t worth his salt?
And this business of monitoring foreign currency accounts and controlling imports is the road to hell, because we’ve come from there already. What is needed is some radical decision-making to recover the government’s image and the country as a destination for FDI. And an anti-business finance minister and an uncontrollable run on the exchange rate are not going to help this. Granger has some decisions to make. The time for dallying is long past.
Lance Cumberbatch

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