BY THE HON. RALPH E. GONSALVES
PRIME MINISTER OF ST. VINCENT AND THE GRENADINES
‘OLE’ TALK AND PLATITUDES
Lorraine Friday, Leader of the Opposition, has been reported by one news outlet as summarily dismissing the Budget of Finance Minister, Camillo Gonsalves, as mere “platitudes”. As every student of the English language knows, a platitude is “a remark or statement, especially one with a moral content, that has been used too often to be interesting or thoughtful”. In short, a platitude is “a banal, trite or stale remark”, reflecting “a quality or state of being dull or insipid”.
It matters not to Friday that objective observers in St. Vincent and the Grenadines and across the Caribbean consider that Camillo delivered an excellent Budget in content and presentation. But, the pithy summary of Lorraine, in his laughable posture of a make-believe “oracle”, is that Camillo’s Budget is platitudinous. In my village, Colonarie, our wise elders taught us that Friday’s conclusion is to be labelled as pure ‘ole’ talk; empty words of no substance; a sort of shallowness which shows that Friday is completely at a loss when discussing fiscal, budgetary, economic matters.
CAMILLO’S SUBSTANCE, NOT PLATITUDES
Camillo’s Budget Address delivered on February 05, 2018, was crafted under the rubric: “Continuity and Change: Job Opportunities in a Rapidly-Changing Global Environment.”
Camillo presented his Budget Address against the backdrop of the 2018 Estimates of Revenue and Expenditure which had been approved by the House of Assembly, a few days earlier. These Estimates totalled $993.5 million comprising recurrent expenditure (inclusive of Amortization and Sinking Fund contributions) of $776.9 million and capital spending of $216.6 million. The recurrent expenditure (exclusive of Amortization and Sinking Fund contributions) amounts to $617.4 million and recurrent revenue is estimated at $621.6 million, thus giving rise to a modest current account surplus of $4.2 million. These numbers constitute our nation’s fiscal compass; they are surely not platitudes!
Camillo framed his Budget within the context of the global and regional political economy; the defining contours of our national economy and its possibilities; the seven developmental pillars conceptualized by the ULP government; and the ten cross-cutting and inter-related issues of actionable focus. All of these considerations and practical approaches have enduring contact with, and relevance to, the overall National Economic and Social Development Plan 2013 – 2025, a multiplicity of sectoral plans, and the 17 Sustainable Development Goals to which St. Vincent and the Grenadines signed on at the United Nations in September 2015! Dear Lorraine, are these real touchstones, “platitudes”? Only his lack of a conceptual developmental frame and his policy emptiness could lead him to conclude that the substantial body of Camillo’s ideas and their inextricable link to practice [“praxis” ___ theory and practice] are “platitudes”. Please read and study Camillo’s Budget Speech! Evidently, Lorraine has not done so; or if he did, his reading was superficial and politically-jaundiced.
Camillo emphasized that our government is “embracing wise continuity, settled stability, and sensible change”. His practical budgetary measures lined up to all this. Yet, Friday labels them “platitudes”. So, let us look specifically at the central practical initiatives in Camillo’s Budget.
THE FISCAL MEASURES
While Lorraine Friday was screaming “platitudes”, the informed public and commentators were hailing “tax reduction”. Specifically, the items of tax reduction announced by Camillo are:
- Reduction in the top marginal rate for Personal Income Tax from 32.5 percent to 30 percent;
- Increase in the standard deduction for income tax purposes, to $20,000 from $18,000 annually;
- Reduction in the rate of tax paid on corporate income from 32.5 percent to 30 percent;
- Reduction in the rate of tax paid on income from tourism businesses (hotels, etc.) to 29 percent.
In 2001, when the ULP government came to office, the top rate for company and personal income tax was 40 percent; and the standard deduction for workers was only $12,000. These items are a further reduction in the tax burden on individuals and companies, yet, Friday considers them to be “platitudes”. Is this man real?
Additionally, Camillo announced plans to strengthen the tax laws and their administration, inclusive of the proposed enactment of a modern Tax Administration Procedures Bill. These are designed to strengthen fairness and equity and to encourage entrepreneurship and investment. Camillo also proposed a series of measures to collect tax arrears ($300 million inclusive of penalties and interest); a three-months “tax amnesty” was also put in place. These are real initiatives, not fanciful “platitudes”.
Further, Camillo introduced three other fiscal measures to address real challenges; he did not duck his responsibility to meet certain problems head-on. So, here are these three other fiscal measures:
- Building further the Contingencies Fund to enable St. Vincent and the Grenadines to cope better with natural disasters by imposing an EC $8 (US $3) Climate Resilience Levy to be paid by all stay-over visitors in hotels, apartments, and short-term rentals.
- Ban second hand vehicles over 12 years old; and increase by $1,000 the Vehicle Surcharge on imported vehicles over 4 years old.
- Reduce the kilowatt hour threshold for VAT on electricity monthly for domestic consumers from 200 KWH (200 units) to 150 KWH (150 units). Before this, only 23 percent of the domestic consumers paid VAT on electricity; now, 36 percent will pay. The bulk of consumers (64 percent), which includes the poor, will still not pay VAT on electricity. (Please remember that VAT is paid only on the basic charge and not on the fuel surcharge; the basic charge is fixed at about 50 cents per KWH; thus, if a consumer consumes 200 KWH per month he/she would only pay VAT of $4 per month).
What Camillo gave away in tax reductions amount to $12 million annually; what he clawed back in new impositions amount to only $3.9 million annually. So, Lorraine, is the total “give-away” of $8.1 million, a “platitude”?
Further, Camillo laid out the composite of six options up for consideration in relation to pension reform. He showed clearly that the current system is unsustainable; he wants to tackle it both for the fiscal health of our nation and the sustainability of a good, affordable pension. Friday and the NDP took no position on this in their comments; he personally ducked the issue with meaningless platitudes.
Camillo laid out a capital budget of $216.6 million. He allocated 74 percent or $160.4 million of the capital budget to two of the nine functional classification heads of expenditure: Economic Affairs; and Environmental Protection.
In Camillo’s capital budget, “Economic Affairs” is allocated $107.4 million or 49.6 percent of the capital budget. The estimated expenditure is spread over the productive sectors of the economy such as Agriculture, Construction, Telecommunications, Transport, and Tourism.
Environmental Protection is allocated $53.0 million or 24.5 percent in the 2018 capital budget. Investments in this sector are intended to enhance our capacity to mitigate the effects of climate change and to build more resilient physical infrastructure (roads, bridges, sea and river defences, and natural forest).
The capital expenditure in the areas of Education, Housing and Community Amenities, Health, and General Public Services together amount to some 23 percent of the 2018 capital budget. Education and Health receive whopping sums in the recurrent budget.
In Camillo’s 2018 Recurrent Budget of $776.9 million, the five major categories of spending are the following: Compensation of Employees, Pensions, Transfers (Public Assistance, Scholarships, State Enterprises, Regional and International Organisations, etc.), Debt Service, and Good and Services.
The categories “Compensation of Employees and Pensions” together account for 56.4 percent of the recurrent budget or an actual increase of $8.8 million in 2018 over 2017. In the category “Compensation of Employees”, the break-down is as follows: Salaries $245.0 million; Allowances $23.5 million; Wages $21.5 million; Employer’s NIS Contribution $12.5 million; Rewards and Incentives $0.1 million.
“Pensions” amount to $60.0 million, an increase of 7.6 percent or $4.4 million more than in 2017. Please note that the government’s NIS contribution is $12.5 million for 2018. In other words, “retirement benefits” for 2018 cost the government $72.5 million. This is a challenge which Camillo is bravely seeking to address this year. Friday calls this a “platitude”. Where is Friday’s courage on this? Has his well-known political opportunism gotten the better of him again?
The increase in the compensation bill for employees in Camillo’s budget is as a consequence of two things: the cost associated with new positions (103 graduate teachers appointed; 64 temporary clerks made permanent; 50 additional police officers; 48 new employees for Modern Medical Complex; 12 new posts in Ministry of Finance; and 5 additional Immigration Officers); and the automatic salary increments paid each year, amounting on an average to roughly 2 percent, to the 60 percent or so public servants who are not yet at the top of their pay scale.
It is to be noted that Camillo has carefully targeted those areas for additional employment in the public service where it is necessary and desirable. He has acknowledged also that in certain areas of the public service, a containment of employment is prudent.
Friday, the make-believe and ridiculously self-appointed, vacuous “oracle” can afford to spew “ole” talk and rubbish; serious people like Camillo have to give serious thought to serious problems for which they have an onerous responsibility. In last year’s response to my budget address, Friday was lost at sea somewhere in the Bequia channel; his contribution was most underwhelming. He continues in the same vein. Friday and the current NDP leadership, driven by their supportive “internet crazies”, are like the proverbial half-blind man standing still in a cavernous, dark alley searching for a moving object, without a searchlight. And then they hypocritically talk of “platitudes”. Their hypocrisy relates, too, about other matters on which the people are daily exposing them.