ONE?FULL?YEAR HAS?GONE, and Minister of Finance Chris Sinckler can neither say “yeah” nor “nay” on the termination of the 17.5 per cent value added tax at the end of the next six months.
“Because,” says Mr Sinckler, “we have to analyze the situation and see what progress we’re making in bringing our deficit down.”
Not the most comforting of words for consumers especially, even though Mr Sinckler, hoping “for a 5.2 per cent [cut] this year”, boasts of the Government’s still being on target for it.
The increased VAT, from 15 per cent, on December 10 last year, should expire at May 31, and we should all be relieved of that extra 2.5 per cent expense.
But the International Monetary Fund (IMF) has advised the Government that it should offer no such ease; that what was a temporary Budget measure by the Minister of Finance should now be permanent.
The 2.5 per cent VAT increase was to realize $124 million; and when there were reports of a decrease in VAT income because of the rise in the tax, Mr Sinckler denied such, arguing the projected revenues were pretty much on target.
Now we have the minister vacillating between his Budget promise to the electorate; “dealing with management of an economy”; and the IMF’s advice.
“It will be under review after a year and then we would look at it and see. At the end of 18 months the extra 2.5 per cent ends, so it automatically goes back to 15 per cent. But we would analyze it to see if, at that time, it should be extended or not,” he said.
But the year has gone. When can we expect to hear from Mr Sinckler whether the 2.5 per cent VAT increase will stay or go? Or could we possibly be told that VAT could be 20 per cent as has also been recommended?
“When you’re dealing with management of an economy,” says Mr Sinckler, “you can’t take anything off the table; everything is on.
“. . . You have to look at the type of society you have; you have to see the capacity of the society to carry burden, whether it is tax burden, whether it is deeper expenditure cuts. We know what the Government’s policy is on holding jobs and everything has to be able to fit around that.”
We agree with the Minister of Finance that a mix of policies is required to cut the fiscal deficit and reduce debt levels and all the rest, without hampering growth in the economy – which he swears he sees and hopes will improve.
Therein lies the rub: the clear manifestation of hope for a people tossed about by the gigantic waves of rising food costs and exploding electricity bills, inclusive of a VAT we were originally asked to carry as added burden only for a while.
