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THE 2018 BUDGET
Guyanese in general and the private sector in particular are no doubt waiting with bated breath to see what comes out of the 2018 budget which the Minister of Finance has promised to unveil in November.
In any national budget, taxation has always been examined thoroughly by opposition parties, the private sector and by stakeholders, because it should be aimed at making a major contribution to the development of a country and to virtually eliminate or substantially reduce the fiscal deficit during that year.
Over the years, consumers in Guyana have suffered an erosion of disposable income due to general increases in prices for food, commodities and other items. In the case of producers and traders, their main complaint has been a decline in business and higher operating costs, which have added to their challenges in an economy that has generally under-performed for most of the past three years.
Against this backdrop, the obvious expectation of the people is some kind of relief. So the Finance Minister’s announcement that there will be no new taxes in the 2018 budget has been welcome news to all and sundry. The Minister’s proclamation should please the Private Sector Commission (PSC) and the nation’s trade unions, which for years have been advocating for lower taxes to ease the financial hardship on the people. However, the extent to which this will happen, if it does at all, is left to be seen. Who knows? It may come as a welcome gift to the people in time for Christmas.
In wrapping up his budget consultations with several groups, excluding the opposition which has refused to participate, the Minister pointed out that since his administration took office, it has reduced taxes for the people. Not only did the Minister boast about his government’s reduction of VAT by two percent and from a range of products, but he also stated that he has “never introduced a new tax…they were all the same tax.”
According to the Minister, budget 2018 will provide incentives to boost the struggling economy, increase production, and for small business to thrive and expand. As reported, productivity in the country has dropped to an all-time low and businesses, especially stores, have suffered a decline in sales by almost 20 percent since the beginning of the year. This has forced some businesses to reduce the working hours of their employees, while others have had to lay off some of their workers.
The PSC has warned the authorities that if the economy does not improve, more workers could lose their jobs soon. Further, if this trend of business contraction continues, given the critical role of the private sector in generating economic growth, production would stall, and this would not only affect workers, but it would also be a setback for the recovery of the economy.
Unlike governments which spend the taxpayers’ money as if there is no tomorrow, businesses are more circumspect. It is obvious that if the revenue of businesses is reduced by 20 per cent, the only way they will deal with it is to reduce expenses, which will have a negative impact on job creation. That said, it would require a skillful balancing act by the Minister of Finance to drastically slash the deficit and, at the same time ease the pressure on the country’s declining foreign reserves.
However, Guyanese are known for their willingness to sacrifice for the national good. But neither the Minister nor the government should take them for granted.
It is hoped that the government will take all of the issues into account before finalizing the 2018 budget, which effectively should concern all the people with its over-arching objectives to improve the economy and the well-being of the masses.
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