Dear Editor, Today Parliament will debate the budget as presented. In previous letters we have outlined our thoughts and concerns on the process and procedures followed to come to the draft budget 2013. Today a little bit about the economy, the taxpayers and why the only choice Parliament has is to reject the budget.
We, the citizens and taxpayers, work either in the public or private sector – the private sector being the one that funds the public sector. If the private sector is not doing well/contracting, eventually the public sector will contract one way or another.
The GDP figures that are used in the draft budget 2013 show at best a public sector growing at a considerably faster pace than the private sector. If we get away from their rosy predictions and base it on averages, last available figures and adjust for inflation, all of a sudden you have a rapidly expanding public sector needing increased funding from a rapidly diminishing private sector. How long do they think they can keep this up?
They are extrapolating on old data and making assumptions when it comes to GDP, Inflation, etc. They use figures that suit their cause. They say inflation will be two per cent when the last three years have averaged over four per cent, You say GDP will grow one per cent per year when business sentiment is down and the last actual figures available are from 2009, four years old at this point. We had a census two years ago and yet they are using old figures.
They have a fiscal policy that benefits companies not registered here and not paying taxes here, to the detriment of those that do! This damages our economy and any hope of investments, both foreign and local.
From our one and only pillar – tourism, they cut the promotional budget. They tax the liquor and cigarette business out of existence. What is next? Electronics? Jewellry? If people shop elsewhere you will get 40 per cent tax on nothing. Hotels, restaurants, wholesalers and retailers will do less business. So will taxis, banks, accountants, lawyers, cleaners, GEBE, Telem, the harbour. So will your parents, your kids, cousins and friends and eventually, you – government will receive less also.
This strain on the private sector will affect their budget. If business is bad then tax revenue will be down. People will be laid-off and unemployment will increase. This will wreck havoc on a social level, leading to less investment, less employment, higher crime etc. The logical end of this is that you will have a public sector and no private sector. They can raise taxes to 100 per cent of everything, but 100 per cent of zero is still 0. They have created and continue to promote a vicious cycle of economic contraction with an ever higher tax burden.
It is their duty to make sure that the taxpayer thrives. That is what we pay tax for! That is what they are elected to do and that is what they swore to uphold. Our Constitution has solidarity principles (Articles 18-22) they basically state that the following shall be of constant concern: Article 18 – Protection of children and the elderly; Article 19 – Certainty of existence; Article 20 – Promotion of employment; Article 21 – Promotion of public health; Article 22 – Protection of the environment and animal welfare.
It is impossible to do this if you have a contracting private sector that needs to fund this. Continuing this course will also lead to ever increasing taxation and loss of business. The next step will be an attack on our basic freedoms as outlined in the Constitution.
They will start taxing us out of our most basic rights and freedoms in their ever-increasing need for funding from a dwindling base. With the strong arm of the law they take from us what we have worked for and saved up through frugal spending. They will take from us what our parents have worked for. They take from our children that same bright future they promised us.
There are rules in the constitution when it comes to preparing the budget, there are five mentioned in Article 100: 1. The budget of the Country’s income and expenditure shall be adopted under national ordinance. 2. The annual budget and the long-term budget shall be balanced. The provisions in the first sentence may be departed from if this is necessary in connection with the restoration of the damage caused by extraordinary events, including natural disaster, in accordance with rules issued under or by virtue of Kingdom law or national ordinance. 3. The government shall submit the budget to Parliament in one or more drafts not later than on September 1. 4. Reports on the Country’s income and expenditure shall be submitted to Parliament in accordance with the national ordinance. The accounts as investigated by the General Audit Chamber shall be submitted to Parliament each year. 5. Rules in relation to the management of the Country’s finances shall be specified by national ordinance.
Two were broken already, which is barely a passing grade…
In the end, it all boils down to biting the bullet in tough times and spending in a responsible and frugal way. Unfortunately, right now there is no excess. This is a worldwide problem, but we need to deal with ours on a local level. That means stimulating the economy, stimulating the private sector and the effect of that will be increased government revenue with a lower tax burden and improvements in the standard of living for everyone in the private and public sector.
They are now faced with a budget that was hastily prepared, late and not based on sound figures. A budget that was not developed according to the principles of good governance, is incompatible with the constitution, contains no clear policy outlines and does not follow through on years of promises made to us, the population.
They are now being asked to quickly decide on it, because it is late. The only choice open to them is to reject it and instruct the Minister of Finance to: 1. Get the books in order first and right now; and 2. Go back to the drawing board and come up with a budget that is economically viable, does not jeopardize the spirit of the constitution, follows proper procedures in decision-making, is well motivated and benefits the entire island in the long run.
Now please let them do their job, so we can do and keep on doing ours.
Soualiga Social Movement – TDH