Deal with public debt
By Clint Chan Tack Friday, July 20 2012
click on pic to zoom in
UWI senior economist Dr Dhanayshar Mahabir yesterday suggested that Finance and Economy Minister Larry Howai examine the issue of the country’s public debt before any consideration is given to either raising existing tax rates or introducing new taxes.
Referring to a daily newspaper (not Newsday) report earlier in the week which claimed the country suffered a loss in revenues of $10 billion over the last four years, Mahabir stated, “I will however prefer not to speculate on revenue loss as information is very limited.”
However Mahabir said, “Of greater concern to me at this time is the level of public debt which now exists and at what level of debt /GDP will the minister begin to feel uncomfortable.”
Secondly, Mahabir asked, “What progress is the minister making regarding revenue collections ...Vat/PAYE/ corporate tax/ customs duties etc?” He observed that “very little is being said of this.”
Thirdly, Mahabir noted Howai is seeking to implement cost cutting measures in the 2013 budget. Mahabir said if this is in fact the case, what are the proposals for each government ministry.
On the issue of the public sector borrowing requirement, Mahabir called on Howai to indicate whether he intends to borrow internationally or locally.
“What are his views on the foreign debt which is currently very low and manageable?” Mahabir asked. He then inquired if Howai could tell the public “ how revenue collections have behaved for the three quarters ending June 30.”
Mahabir said if these revenue collections were off target, Howai should indicate “ by how much and why.”
Mahabir then asked Howai to give his position on the Heritage and Stabilisation Fund, which his predecessor Winston Dookeran indicated stands at approximately US$4 billion.
“These questions are all very important at this time. I hold the view that they should be addressed by the minister first before he speaks of raising existing tax rates or introducing new taxes,” Mahabir said.