Increase in Old Age pension — VAT removed from some items

Finance Minister and Prime Minister Patrick Manning is expected to announce an  increase in Old Age pensions and the removal of Value Added Tax from a list of foodstuff, when he delivers his Budget at 2 pm today, sources stated yesterday. There would also be an adjustment to the tax rate, but insiders could not  give any  figures. The total Budget expenditure is expected to be close to $24 billion. In confirming the increase in pension, Government sources said that it was designed to compensate specifically for the rise in the cost of food prices.

These sources said the increase would amount to $100 — ten percent of the pension, which is currently $1,000 a month. It would be the third increase for pensioners within recent years. “It is really like a form of cost of living or food subsidy,” one source noted, adding that Government was giving the increase to prevent any  deterioration in the financial situation of pensioners. Government sources stated that the 2004/2005 Budget would make a “great attempt to reach the ordinary man and the disadvantaged.” Pointing to the need to tackle the problem of the  disparity of income — which was reinforced only recently by President George Maxwell Richards — sources stated that Government had to ensure that sufficient quantities of the money circulating within the economy reached the poor and the dispossessed.

The Minister of Finance would have  two quivers to his arrow today, sources stated. From a political perspective  the Government has to be cognizant of the fact that an election was rapidly approaching. “That means that you have to start  sweetening the pot,” one source noted. From an economic perspective, Government is seeking to  build the economy’s “absorptive capacity” — its capacity  to deliver products — having regard to Vision 2020 and the long-term economic objective. Government sources dismissed speculation circulating yesterday that the duties on  foreign-used cars were going to be increased. These sources stated that Government hoped to provide the infrastructure and the transportation network  to deal with this expanding mobility, rather than seek to penalise people by imposing heavier duties on foreign-used vehicles.

The Budget would announce the financing for a major road-building programme. Apart from this, sources stated that there would be a very vigorous construction programme in the Budget which would include housing and the construction of high-rise Government buildings and the school repair and replacement programme. The programme would have the important additional benefit of generating employment. Sources stated that very few ministers outside of the  Minister of Finance and his three junior ministers knew anything about the fiscal measures in the Budget. This package is expected to be formally approved at a special Cabinet meeting at 12 noon today. Last year’s Budget presentation was memorable because  the Opposition, for the first time in the history of the Parliament, missed it. The UNC boycotted the sitting in protest of the arrest of two of its Mps, Manohar Ramsaran and Hamza Rafeeq.