Shadow Finance Minister Mark Golding began his budget speech yesterday by noting “the burning issue of low growth”, observing that even what he called the “modest but achievable” growth targets the last PNP Administration had set for the years 2013/2014 to 2019/2020 had now slipped — and that if they had been achieved there would have been more money to spend on wages, hospitals, farm roads and water systems.
Golding also observed that the government had therefore “failed miserably” in meeting the target they set themselves.
Mentioning reaching the target of 5 per cent of GDP in year four, he compared it to the 1.5 per cent GDP target for 2019/2020, our year four, comparing that to an average of over 2 per cent GDP growth between 2003 and 2006.
He argued that if the new definition of public debt introduced April 1st 2017 had been used for the debt in 2016, the PNP would have left it at 113 per cent of GDP as opposed to the then recorded 122.3 per cent.
He noted the cut in the primary surplus, allowing the announced $14 billion tax cut, was due to our reaching the debt to GDP target a year earlier due to the Petrocaribe debt buy back at less than 50 cents on the dollar, a reduction worth 9 per cent of GDP.
Golding credited previous administration’s tax reforms such as third party information laws and transfer pricing rules (as well as organisational changes) with having driven the sharp recent improvement in tax collection, from $411.85 billion in fiscal year 2015/2016, to a projected $565.88 billion in fiscal year 2019/2020, or an increase in taxes of 44.3 per cent or $154 billion. He noted this is way above the 19 per cent increase in inflation, or the cumulative increase in nominal GDP of 32.8 per cent, but that it couldn’t have come from growth “as there has been precious little growth”.
He argued that what he termed the “tax rollbacks” could have been directed to cutting GCT, or reducing SCT on gas, questioning the move to indirect taxation as “worsening inequality”, and calling for all taxpayers to get a break, “not just beneficiaries of corruption and poor governance”.