Budget questions

For starters, we all look forward to finding out whether we will possibly experience a fourth year of economic decline. We have all noted the decline in the production of oil and gas, as well as the reduction in the international prices faced by these commodities.

If the Minister were to report much lower revenues than what was budgeted, would we see a more concerted effort at fiscal consolidation? Of course, the Prime Minister alluded to a possible reduction in the numbers of persons employed in the public sector.

While this admittedly may have been to gauge public reaction, we can all agree that this will always be a contentious issue. Certainly, we expect that there would be initiatives to reduce expenditure, which may involve further cuts to capital expenditure as well as transfers and subsidies.

If our attention is turned to revenue - the other half of the equation- then there are many considerations that are necessary.

First, what fiscal measures would the government consider to address this half of the equation? Would the government look at revenue generating measures such as new taxes? In this regard, we can expect an acceleration of the effort to bring property tax on board. Certainly, training of personnel needed for the valuation of properties will serve to move forward the preparation for the implementation of the tax.

Second, is the government presently close to the full potential of tax to be collected? What is the tax gap (the difference between tax collected and the tax that should be collected) presently? How is the government addressing the issue of tax evasion (which is illegal)? What about the informal, underground or hidden economy? It has been estimated by a number of scholars such as Amos Peters in an Inter- American Development Bank study that the size of the underground economy lies between 28 and 33 percent of present GDP, depending on the year and the method applied.

This represents a tremendous amount of market-based production and exchange that escapes official detection. This then becomes a significant source of the Tax Gap at various levels and includes corporate taxes, personal income tax, excise taxes and Value Added Tax (VAT).

To date this government has not demonstrated that they are serious about evidence-based decision making. Moody’s had also stated in April 2017 that lack of timely macroeconomic data and weak policy execution capacity has limited the effectiveness of the policy response to the energy price decline, yet the government continues to ignore the need for proper research and data collection. We are still asking for the economic plan for the country? Where is the evidence of the use of studies to drive policy? A budget is coming - we look forward to data being presented and data/evidence driven decisions that reflect creativity, sensitivity and provide solutions to our fiscal and development problems.