The Budget Dilemma

The budget for the new financial year has been announced and the news is not good.

Despite making significant cuts in debt servicing amounting to $123 billion the current budget still has a deficit of $84 billion.  The effect of the worldwide recession continues to adversely affect the economies of the Caribbean with the Guyanese prime minister stating that if it were possible for a country to declare bankruptcy then it is likely that the entire Caribbean would do so.  The point is that while bigger countries can do things to bolster their economies, there is very little that countries with smaller economies can do.

The problems remain the same, if the government cannot create jobs and grow the economy then there is no future for the country.  The challenge for this year is two fold; firstly and most importantly is what will be done to generate jobs.  There is a limit on what you can cut from the budget. In order to significantly reduce expenditure you would have to send home thousands of persons and this would create significant disruptions to the economy.  The answer is not more redundancies but more jobs; if the budget for this year does not focus on job creation then it is going to be a difficult dismal year.  We cannot delay in implementing strategies as we have already waited too long.  We need to find productive work for the people to do or the consequences will be grave.  It is not enough to educate the people only but there must also be opportunities for those people to help build the country.

The second issue is the issue of tax compliance, there are too many persons who are not contributing to the cost of running the country.  If we were to collect all the taxes that are due there would be a significant reduction in the size of the deficit.  The governments, past and present, have refused to collect the taxes because it will affect too many of the people who vote for them.  As a result the future of the country has been sacrificed for the sake of retaining power.

Until we can change the mindset of the people about paying taxes there will be no significant improvement in the living conditions.  It seems to me that those who refuse to pay taxes should not benefit from the sacrifices of those who do.  Perhaps it is time to make proof of payment of taxes necessary (or proof of being below the tax threshold) in order to access government funded institutions such as schools and hospitals.

Tags: budget, debt, economic, economy, exchange, Finance, investment, job creation, money, policies, recession, saving, savings, taxation, taxes