Cost-of- living measures are missing from the Budget

Jan 25, 2024 Features / Columnists, Peeping Tom

Kaieteur News – An amazing feature of the PPPC’s 2024 Budget is the setting aside of monies for cost- of-living relief. Unfortunately, the government does not have a clue as yet as to how its going to utilise the sums that it has set aside for this purpose.

This defies the logic of a Budget process in which sums are set aside to fund initiatives and projects. In this instance, the government has set aside $7B for cost-of-living relief but has no clue, as yet, how it is going to spend this sum.

One of the major economic issues facing the population is the high cost of living. The price of a small soft drink has moved from G$140 to $220. And yet, the government merely sets aside a sum in Budget without any accompanying measures. Last year, the government had set aside G$5B for cost-of -living relief. As year-end approached, the government was forced to make a whimsical announcement because it would have led to public outrage if, in the face of the rising cost of living, the government had returned the allocated G$5B to the Treasury.

The government also did not see the callousness of waiting until year-end to roll out the relief. Consumers had been grappling all year with rising prices. As such, it conjured a ‘brainwave’ and decided to give a one-off $25,000 cash grant to public sector workers, pensioners and members of the Disciplined Services. Logically, the self-employed and private sector employees questioned how they would benefit.

The one-off cash grant, which only cost the government G$1.7B cannot be deemed a cost- of-living measure, because it was paid at the end of the year and was a one-off payment. Even the government described it as a ‘bonus’. The government also gave a one-off cash grant to some 70,000 pensioners. This amounted to some G$1.8B. In addition, a one-off assistance of $35,000 to the disabled and persons recorded in the government’s public assistance register.

Collectively, these one-off payments amounted to some G$4.1B The remainder of the monies of the G$5B that was set aside for the year for cost of living relief was given as fertilizers to farmers. This is the PPPC’s idea of cost of living relief: one-off payments. While public sector workers, members of the Disciplined Services, pensioners, public assistance recipients and the disabled received one-off payments, importers received sustained relief for yet another year in the form of reduced duties and taxes on the freight component of their imports. The government is yet to undertake a study to determine whether these importers passed on the benefits of this relief to consumers. But it has continued to sustain this measure in the face of spikes to freight costs.

It is instructive, that a local rice producer has indicated that his selling price merely increased marginally. Yet, the final product had a high mark-up when sold in the market and supermarket. So who really is imposing these huge increases on consumers? And what can the government do to bring greater relief to consumers? This column had suggested that for public sector workers, the government can offer a monthly cost- of-living allowance. At $5,000 per month, it should only cost the government just more than G$3B. In offering this allowance, the government can urge the private sector companies to follow suit so that private sector workers also benefit. In fact, it can make this mandatory with a sunset clause. The government can also monitor price gouging my retailers. Especially, in the food sub-sector, there has been a steep rise in prices of local vegetables and meat and this can only be attributed to price gouging and greed.

Instead of raising the income tax threshold, which benefits all employees and acts as a subsidy to private employers, the government should have raised the national minimum wage. Every citizen should be encouraged to pay some tax to contribute to national development. Rather than increasing disposable income by foregoing taxes, it would have been much better for the government to increase the national minimum wage which is palpably low and which leads to widespread exploitation of low-income workers. The government should also consider as a temporary measure placing a subsidy on water and electricity tariffs for consumers whose bills fall below a certain threshold. The government can also work to provide subsidized or free transportation for school children instead of the one-off Because We Care Cash Grant which is doled out to both rich and poor parents.

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Cost-of- living measures are missing from the Budget

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