Citizens must start preparing

Ideally, the country’s economy should by then be so diversified that we would be able to sustain our standard of living through a Gross Domestic Product profile that is mostly based on manufacturing, tourism, agro-processing, cultural products and intellectual services, as well as value-added initiatives based on oil and gas. To this end, the Government has begun negotiations for a plastics industry, is trying to encourage entrepreneurship in various ways, and has laid some groundwork for cultural work. But these will only bear fruit, if at all, in the next 15 to 30 years. Citizens need to start preparing for parlous times from now, and they cannot depend on the government to do so for them.

In this regard, the most important measure in the new Budget is the flat tax. All citizens will now pay 25 percent in personal income tax, with all persons who make less than $5,000 a month not having to pay any tax at all. That adds up to 300,000 persons, or nearly half the workforce of Trinidad and Tobago, who will not be paying personal income tax.

This means that a significant number of persons should have more disposable income over the next few years. The question is, what will they do with it? It is an unfortunate characteristic of the national psyche that, when people get a windfall, they tend to spend it in consumer items — from new cars to new clothes. But, given that the economic bubble must eventually burst — or, if we are lucky, just contract — it would be wise for all citizens to prepare for that belt-tightening future. And that leads to the second question — what are the best ways to prepare?

Answers will vary according to the particular situation of the individual. For some persons, investing the extra money in acquiring new skills may be the best method. In a contracting economy, a person would be wise to be marketable, since economic demands will almost certainly change. More importantly, if there are a sufficient number of marketable people, this in itself helps stave off economic contraction.

Citizens should also try to invest any extra income they have. There are a multitude of ways to do this — by putting it into a business, by banking it in interest-earning accounts, by buying stocks, and so on. However, most citizens, including much of the middle-class which has money to invest, are intimidated by the financial sector. It would be wise for the banks, brokerage firms and other such organisations to publicise their services now, in order to reach people who might not normally think of putting their money in such areas.

We live in boom times, and the country’s politicians will surely take advantage of that for their own ends. Sometimes, those ends serve citizens’ needs, more often they just serve the politicians’ needs. So citizens must take advantage of the boom through their own initiatives, with the future in mind. By doing so, they will help secure both themselves and, in the long run, the nation.