(Part 1)
must do that in order to make sure that it does not repeat the mistakes of the past or continue with programmes and policies that do not add value to people’s lives or businesses. Consequently, the budget serves also as a means of enabling the government to take corrective action when performance varies from actual or realized outcomes. Lessons are learnt and are applied as appropriate to bring about improvements. It is the place where people look to see if the things that the government will do respond to their needs or not.
First concern
IThe first concern one should have about the budget is the allocation of resources between the government and the people. The allocation of resources between the government and the people is described by Professor Clive Thomas as the tax level. The tax level is measured by expressing the total tax revenue collected by the government as a percentage of the gross domestic output or GDP of the country. Work is still being done on determining the allocation. However, based on the information contained in the budget, preliminary estimates show that the government was likely to take 24 per cent of the income generated in the economy next year from households and businesses. This is in contrast to an average of 22 per cent that was observed between the periods 2010 to 2015. In other words, it would appear to this writer that taxpayers in Guyana were being asked to allocate two percentage points more of their income to the government. Since this was likely to be the actual amount of money that Guyanese will give the government, it represents the effective rate at which they will be taxed taking account of all the taxes that they will encounter in 2017. This means that in some instances the amount that Guyanese will pay will go up and in other instances it will go down. t is these undefined changes in the effective tax rate that have to be sorted through in order to understand what impact the taxes will have on households and firms. One needs to know where the burdens will lie and if persons will be able to adjust their spending and lifestyles as a consequence of the tax. Consequently, Guyanese need to be very careful about the noises being made about the budget from various quarters.
(To be continued)