GOVERNMENT did not take the “easy way out” of raising taxes and cutting social spending with the 2011/ 2012 national budget, according to Finance Minister Winston Dookeran.
He said it was quite a challenge to keep increased revenue without adding a taxation burden.
The country was overburdened and not able to turn the corner of growth, he said, but added that there were many unexplored areas of existing taxation that could be explored.
Dookeran was the feature speaker yesterday at the Chamber of Industry and Commerce’s annual post-budget panel discussion at the Chamber’s offices in Westmoorings.
He noted the fiscal deficit had continued for another year, and coming out of a period of negative growth, Government had to go further into deficit financing.
“The issue of deficit financing, in my view, is not so much the size of the deficit, but the use to which it is put,” he said.
He explained the deficit was not to finance recurrent expenditure but to facilitate new investment.
“You have to spend your way out of deficit,” he later told the media.
He also took the opportunity to clarify how the increase in minimum National Insurance pensions, from $2,000 to $3,000, would be funded, a move questioned by Opposition Leader Dr Keith Rowley. Dookeran said there would be an increase to the contributions from those in the $8,300 to $10,000 band— middle-income earners —to fund this.
Senior economist and manager at Republic Bank Dr Ronald Ramkissoon said over the last three years, there has been a decline and contraction of the economy, which was a “serious matter”, and he had been looking forward in the budget for measures to build growth momentum.
He said the budget had identified a number of measures with the potential of generating positive growth “to turn the economy around”.
He noted the issues that needed to be addressed “frontally” were implementation, accountability and transparency. He encouraged the minister to get the capital and energy sector projects “off the ground” so there can be positive growth.
Ramkissoon noted one challenge was the paucity of data on local investment and said the Central Statistical Office needed to address this, so the minister can speak from a “position of knowledge”. Dookeran said that unlike academics, he had to come to conclusions with “imperfect data”.
The Finance Minister also stressed that the performance of the budget was not solely his responsibility, predicting that on Friday, in Parliament, he would be “attacked” for forecasting a two per cent economic growth when there was, instead, a 1.4 per cent contraction.
He said he could only set the platform and it was up to everyone, including the Opposition, to “make it happen”.
Source:TEN
