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EDITORIAL: Focus debate on tax policies


EDITORIAL: Focus debate on tax policies

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THE BUDGET OF 2015 has been delivered and debated in the House of Assembly, and it seems from all accounts that there has been an increase in taxation of some $200 million.

This is a large figure, and there is bound to be much more debate outside the House than in those hallowed chambers. Questions will present themselves to the number crunchers and to supporters of the Government followed closely by those who support the Opposition.

In a genuine democracy that is how it should be, and it would be unusual if both sides were to be agreed on all aspects of policy, especially in matters as sensitive as taxes. On this occasion there may be more than usual controversy since the nature of the Reply has been a mixture of raw politics with some declaration of policy differences.

We have seen this approach in the past, in which the politics of the occasion did not escape the attention of Tom Adams and more recently the late David Thompson. On both occasions material was disclosed within the privileged quarters of the Assembly which though connected with the Budget was more directed at the underlying politics of the state of the country.

Perhaps the academics in their ivory towers may wish to examine this approach to Budget replies, since it has now been employed on at least three occasions within living memory.

At the same time one has to remember, as David Thompson often said, that it is the policy of the Government and not that of the Opposition which is on trial.

There is more than a grain of truth in that statement, but some members of the public at all levels may still want to know what the Opposition might have done differently. This is a pertinent question since budgetary proposals more so than other policies have a direct impact on every man, woman and child in this country.

Whatever one’s views, we may well have reached the stage where there is need for a major debate focused on the tax policies appropriate to this country at this stage of development and this Budget in particular may have driven this idea to the front burner.

The abolition of certain allowances under the Income Tax Act has a direct consequence for those who previously enjoyed those allowances and often means a direct increase in taxes flowing into the treasury, and less money left in the taxpayer’s pocket, and what is not done directly may thus be done indirectly.

Taxation has been used in the past to push socially desirable policies deemed to be in the national interest and in this way a finance minister can shape the policy of the Government in helping the development of some emerging industries.

It is a fact of life that the fiscal deficit has to be dealt with and the gap closed, and it is a difficult balancing act to boost investor confidence while reducing the deficit. The policy must be clear and the policies consistent with the predetermined objective.

A country cannot be managed on the bottom-line approach applicable to commercial enterprises. The critical question is always how one chooses to ensure that the vulnerable are taken care of; and sometimes the vulnerable may include the middle class. When we have reached that stage there is scope for a vibrant debate on tax policy.