The 2017 budget
The reality
One could see from the data presented in last week’s article that the intention of the government is clear. It wants to see the people of this country better off than they were before. As a consequence, it has taken steps to reduce the burden of the working poor by increasing the exemption and reducing the tax rate in the 2017 Budget. Anyone who cares about the welfare of their fellow Guyanese could see the wisdom of making such a move. When the effects of the two courses of action are combined, the working poor will no longer have to carry the same proportionate burden as the well-off in financing the programmes of the government. Even though the exemption is $60,000, the reality for the working poor is that anyone in that category will have to be earning in excess of $63,559 in order to start incurring a tax liability and that liability will be minuscule, being less than 20 cents on the entire income. The tax relief extends well beyond the exemption amount. Income would have to be as high as $66,050 before anyone would have to pay as much as one per cent of his or her monthly income in taxes. These steps expressed in the budget ought to make the working poor happy, yet the laudable actions seem to be generating unfavourable reactions. They appear reluctant to believe that positive changes have come their way. Table 2 below offers some insight into what might be the problem.
More desperate
Matters appeared to be even more desperate where non-food items were concerned as can be seen from Table 3 above. The deficit for non-food items continued into 2015, even though it began to improve with some of the measures taken by the new administration. An item with an important impact is the value-added tax or VAT. At 16 per cent, VAT has contributed to the real deficit of the poor reaching as high as $75,000 in 2014. Though things continue to be tough, the deficit for non-food spending had fallen to its most manageable level yet in 2016 and was projected to improve further in 2017. However, things remain very difficult for the working poor when total spending is accounted for. They will still be short an estimated $22,000 in 2017 even with all the favourable changes planned.
As things stand now, the working poor will remain in a state of permanent dependence if further action was not taken. The reluctance to believe that positive changes have come their way might stem from a holdover feeling about the difficult past years where it looked as if there was no glimmer of hope for them. Under such desperate circumstances, people can easily be seduced into believing that better could be had by travelling abroad or engaging in some type of illicit activity.
The budget of 2017 is trying to ease the situation by altering the contribution that the working poor is asked to make towards government spending. It is one of several strategies that must be employed to bring relief and protection to that class of workers, and by extension all Guyanese. The government needs to have better information about the income and expenditure of families so that more effective policies can be designed and