Economist: Brace for VAT increase

UWI economist Dr Vaalmikki Arjoon yesterday warned that Value Added Tax (VAT) may be increased from 12.5 percent to 15 percent as government seeks to increase it revenue stream. He gave this prediction while addressing a pre-budget forum hosted by the Penal/Debe Chamber of Commerce at Powergen Sports Club in Siparia.

Arjoon also predicted that another deficit budget is in the making as Finance Minister Colm Imbert would once again engage in borrowing to finance state expenditure. “It is quite likely government will continue to borrow to fund the budget, but the question is how much will he borrow,” Arjoon said.

He suggested that one method of increasing agricultural production was to move away from the CEPEP programme to one where the focus is on agriculture. He said the agro-intensive initiative could be called FARMPEP.

Also addressing the forum was former Minister in the Ministry of Finance Mariano Browne who observed that the Budget would be one in which the nation would have to face its Maker. “We are in a very difficult situation and government has become bloated over time and it is quite clear oil is not going to rise. So this budget is one where we have to face our Maker,” Browne said.

He predicted that government revenue for 2017 was in the range of $35 billion after falling from $60 to $42 to $38 billion in previous years. Browne said that ministries which would continue to receive the lion’s share of allocations are Education, Health, National Security and Finance.

For his part, Opposition Caroni Central MP Dr Bhoe Tewarie identified lack of confidence as the main hindrance to economic growth, saying high crime and murders are impeding foreign direct investment. “We have now surpassed Jamaica as the most dangerous in the region and this is causing a lack of confidence in the economy,” Tewarie said.