On January 21, the Minister of Finance presented a colourful and snazzy response to growing criticism and complaints on his fiscal policies.Upon inspection and analysis of the document and his statement, however, one would realise that it is without substance and devoid of any explanations regarding how this plan stands to solve any of our economic issues.
Beyond pandering to both the gullible and the uneducated in our society, this presentation neither addressed the amount of revenue these initiatives would create for the Government, nor the impact it would have on our cost of living.
But what is truly insulting is the fact that the Minister can prepare a "proposed shopping list" based on consultations with the Central Statistical Office, that claims to be the "average monthly household consumption" of a family size that is not explicitly stated, but bases its findings on the cost price of one of every item.
This was most likely necessary, however, to undercut the true extent of the inflationary burden these VAT additions will have on the purchasing power of the citizens, especially since it was being compared at the time to the "savings" that will be incurred from the increase in the exemption cap for income tax.
Based on the decision to increase the cap on people qualified for exemption from income tax, from $60,000 to $72,000 per annum, the people who were not previously exonerated, an estimated 59,000 people, will now enjoy an additional $210 per month, due to their new status.
If you were to immediately subtract the increased VAT on the "proposed shopping list," which was calculated to be $50.86, then that person is now left with $159.14. What you will realise however, when examining that list, is that a family of four would have to extremely ration themselves if they are to survive, on one of everything that they are suggesting.
Granted, I am sure that not every family will consume every item listed, thereby allowing for the purchase of additional items on the same budget, however, the vast majority of items are staples of our diet, whereas the distinctive items are fewer and don't impact the budget in any significant way.
The really baffling thing about this entire plan, however, is that it seems to directly conflict with the government's overall objective to accumulate more revenue in the face of an impending recession. While indeed, an increase in tax revenue can occur as a result of soaring inflation, without an increase to foreign revenue streams, however, what will eventually happen is either we will have to devalue our currency on account of our money eventually becoming worthless, or the Government will have to continuously reduce VAT and other taxes, something that is already being discussed by Mr Imbert.
Because if a finite amount of money is being circulated constantly, but is losing its value on a regular basis, it will only diminish in the hands of the citizens and find itself locked away in the Treasury. But what is the point of a government having a fat public purse, if the pockets of its citizens are empty?
Ravi Maharaj