Latest update April 19th, 2024 12:59 AM
Jan 27, 2016 Features / Columnists, Peeping Tom
The government will surprise the nation this year. Last year it was ill-prepared to present the Budget even though it had a full three months to do so.
This year there was adequate time. It is not clear whether there was adequate consultation. But adequate time will allow for the government to finally deliver on its major promises of significant salary increases, pending negotiations with unions, and a reduction ( not adding to the zero-rated list ) of VAT.
The economy needs a stimulus package. The private sector has been calling for an economic stimulus but has not suggested what form it should take.
This column believes that the citizens need a stimulus far more than the entire private sector. The best stimulus will be to increase the disposable income of workers by giving them more money.
This does not mean increasing wages above any increase in productive gains. The government has a deficit to fill in terms of wage increases but it would be unreasonable to ask the government to offer massive across the board increases to all workers. This has to be a phased approach with certain categories of workers, beginning with police and teachers, and nurses being significantly bumped up before the pen-pushers are given their dues.
An increase in the disposable income of households should not only have to come from salary increases. It can come indirectly from reduced taxes on petrol.
Transportation costs are one of the major expenses of consumers whether you are travelling by minibus or by SUV. It eats into your finances. Petrol prices have fallen around the world but in Guyana prices at the pump remain unchanged. The cost of living is not going down in Guyana because fuel prices are high.
The government has already benefitted by collecting billions of dollars in petrol taxes since the prices began to fall. That money is available to pay workers. This is one stimulus but should be handled selectively. Not everyone should benefit from higher-than- inflation increases in salaries this year.
The government also has a windfall in foreign exchange savings from the decline in world oil prices. These savings should be ploughed back into the system to drive the foreign exchange rate down. It is too high. It has been so for a long time. The Guyana dollar needs support if import prices are to fall.
There will be some effect on earnings for exports but this is likely to be marginal. Lower import prices will mean that the cost of imported items will fall. Lower taxes on petrol will mean lower prices at the pump and greater sums in the hands of consumers. It will mean lower production costs, offsetting the lower export earnings in Guyana dollars due to the improvement in the strength of the local dollar.
The increased disposable income will be the boost that the commercial sector needs. Increased disposable income will boost local sales and nothing stimulates local commerce than people having more money and removing illegal vendors from off the pavement.
The government should consider a new type of stimulus for the economy, not by withdrawing massive sums from its bank accounts held with the commercial banks but by making more disposal income available.
The government has an obligation to reverse the slide in the Guyana dollar which occurred soon after it took office. There is also a duty to pass on reduced oil prices to consumers. Some categories of workers should be paid better.
People need to be better off this year. It is good to make the city look nice and clean but the ordinary man also wants his house to have sufficient food; he wants to take his family to the movies at Giftland and the fun park at Princess Hotel. To do these things he needs money in his pocket.
Please share this to every Guyanese including your house cats.
Apr 19, 2024
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