More tax reforms ahead - Could be announced in Budget reading
Published:Tuesday | March 8, 2011 | 12:00 AM
Daraine Luton, Senior Staff Reporter
The Government is considering major taxation changes as part of a menu of measures being designed to stimulate production in the next fiscal year.
Last Friday, a special Cabinet meeting was convened to receive a presentation for the Inter-American Development Bank on tax-reform measures, which government insiders say could be announced during Finance Minister Audley Shaw's Budget presentation next month.
With the country still reeling from the effects of the global economic recession and the Government continuing to apply the prescriptions of the International Monetary Fund (IMF), Prime Minister Bruce Golding has declared that measures will be implemented to breathe new life into the economy for the financial year which begins on April 1.
According to Golding, he has already told the IMF that "we cannot starve ourselves back to good health".
Finance Minister Audley Shaw is to table the Budget for the 2011-2012 fiscal year in Parliament later this month and Golding declared that space will have to be found in to stimulate economic activity in the country.
"I am hoping that we are going to be able to, even within the standby agreement, even within the medium-term economic pro-gramme that we are pursuing - and we are not abandoning it - ... within that programme, can we allow enough fiscal space to put a little transfusion back in the economy, get some money back in the economy so that people can start working again and people can start spending again," the prime minister said.
Shaw had projected a growth rate of 0.5 per cent at the end of this fiscal year. He also projected inflation to range from 7.5 per cent to 9.5 per cent. Year-to-date inflation is 7.1 per cent with last month's numbers reflecting -0.2 per cent.
Golding worried
Golding said having looked at prices relating to oil and food such as corn and wheat, he is worried.
"(The prices) scared the you know what out of me and the projections going down are not good."
In the meantime, the prime minister said owing to the recession which led to the need for the IMF programme, his administration has had to take a lot of money out of the economy.
"We have had to raise taxes ... we have in fact contributed to the dehydration of the economy," Golding admitted.
He said the time has come to reverse the effect of that dehydration.
"As I have said to the IMF, I know doctors give some prescriptions that sometimes defy layman's understanding, but I have never heard a doctor say to a patient, you are overweight, you are carrying too much pressure on your heart, you are not to eat any food for the next three weeks, you have to lose some weight."
"I have said to the IMF, we cannot shrink ourselves back to good health. Some allowance has to be made for us to provide the stimulation that the economy needs if it is to recover."