Dr Marlene Attzs Sooping-Chow, Economist and ‘My Point of View’ columnist, shares her initial thoughts on the National Budget.
It was Monday, October 2 and the stage was set. The Parliament Chamber was pensive and the tone sombre – except for the sporadic, unwelcomed banter on both sides of the Chamber. Budget 2018 is serious business. No big surprises given the state of the economy – less revenue expected from the traditional sources and expenditure still higher. The bottom line: another deficit budget.
The initial reactions from the public have been predictable, from indignation: “How he could increase gas again?”, “Is only poor people suffering”; to resignation and acceptance of the economic space within which we find ourselves: “Well, we don’t have the money so…”.
In case you missed it, the main theme of the Budget presentation was Changing the Paradigm. The paradigm shift was evident. The Minister of Finance sought to ensure that everyone, from big business, to oil and gas companies, to commercial banks, to John and Jane public – was touched in the budget. Everyone has to adjust is the clear message.
To his credit, the Minister made some effort to address the “economic stillness” to which I referred in my last column (CN September 17). The economy should benefit from boosts to Agriculture, Housing, and Small & Medium Enterprises, all of which are intended to generate economic activity over the next fiscal year. This economic activity could reduce unemployment, boost construction and earn foreign exchange.
The Budget included the customary diversification mention – including incentives for tourism and yachting. Diversification-speak notwithstanding, enter the Gas Master Plan which suggests our economic hopes continue to be firmly wedded to gas – Juniper, Starfish, Angelin – some of the gas projects mentioned last Monday.
A slew of new and improved taxes and revenue-generating measures were also unleashed: taxes on the profits of commercial banks, on gambling machines, new licence fees on private hospitals, new duties on new and used tyres and a 10 per cent tax on all cash winnings by the National Lotteries Control Board – who wants to be a lotto millionaire now? The reduction of the fuel subsidy for both super and diesel gas, while economically sound, will surely cause some palpitations among the travelling population.
In principle, these are all good ideas in times of austerity. But the devil, they say, is in the details. First, implementation of these measures. I ask, for example, from whence cometh the required human resources to visit casinos to check and record the number of games tables to ensure accurate levying and collection of the applicable charges? Presumably this task is left up to the Board of Inland Revenue, the same entity that continues to not collect hundreds of millions of dollars in outstanding taxes – last fiscal year had a shortfall of $669 million in VAT collection.
The second concern I have is the distributional impacts of some of these measures on middle- and lower-income groups. Will maxi and taxi fares increase again? Will supermarkets pass on the increased cost of diesel to customers? Will banks increase their fees yet again?
Over the coming weeks and months, we will be challenged as the impact of Budget 2018 unfolds. The real gamechanger will be whether we, as a people, can collectively adjust and cut our cloth to suit our coat. And that’s my point of view.