Bill shows free spending

When the Government announced its Budget measures in September, this newspaper raised the issue of the extra disposable income that the lowered tax ceiling provided. That measure removed 300,000 citizens from the income tax net and injected $1.7 billion into the cash flow. We suggested that citizens should invest their extra income in some way — in education, in stocks, in interest-bearing accounts, and so on. But, even allowing for the fact that this is the christmas season, it appears that our advice has largely fallen on deaf ears.

If so, this is hardly surprising in the consumer-oriented, take no heed of the morrow, culture of Trinidad and Tobago. And let us not blame the United States for our own shortcomings, as though we were mindless zombies fated to follow the now-for-now messages of other societies. The US may be a consumer culture, but it is also one which places great emphasis on investments and entrepreneurial activity. We, on the other hand, always have demand but never worry about what we are supplying in return. Why should we? We have oil and gas.

But the oil and gas will run out and, even before that happens, the prices will drop. Yet the Government continues to act as though the dollars will always gush, and even though its spokesmen have voiced the right rhetoric about citizens saving and investing, there has been no concerted campaign to persuade people not to spend on items which will not generate income. Of course, the Government itself, with its big plans to build complexes and offices, is not leading by example. Even its continued boasting about the Oil Stabilisation Fund, in which a portion of energy revenues is set aside, rings hollow. For one thing, the percentage being put into the Fund should probably be higher and, for another, there are still no measures to make the Fund immune to the fancies of whichever politician happens to be occupying the Prime Minister’s office.

As presently constituted, the Fund is therefore controlled by the Government, not by the State.

All of this has led to a situation where, more and more, the Central Bank is having to take action to correct economic stumbles that can be traced back to Government policies. But such a tension cannot be allowed to develop further. The concern generated by this very slight drop in the exchange rate implies a certain lack of confidence in the local economy. But what the Bank has directed is a very slight adjustment that, if the signal is heeded, actually improves the country’s long-term fiscal prospects.