IN MAKING his opening presentation in the 2006/2007 Budget presentation in Parliament yesterday, Finance Minister Dr. Omar Davies pointed to the imperative of having a social pact if the country is to move forward.
His appeal was pitched against the background of the onerous debt burden the country is carrying and attempts to have a successor agreement to the Government/public sector employees Memorandum of Understanding which expired on March 31.
While few persons would argue against the soundness of the minister's appeal and reasoning, a social pact will not work if the parameters are seen to be more restrictive on the public sector wages, while the costs of goods and services are moving well beyond many people's ability to maintain a decent standard of living.
At the same time, the minister pointed quite correctly yesterday, not only to the imperative of the Government improving its own efficiency in collecting taxes, but for other sectors in the economy to ensure compliance and payments.
The fact is that we all pay a heavy burden when significant players and sectors in the economy fail to play their part. Of equal importance is that the money collected should be well spent, and not be wasted, because of inefficiency and cost overruns on state projects as well as outright corruption.
The Government will also be faced with the big challenge of maintaining fiscal discipline in an election year where we know there will be the temptation to curry favour with voters with the use of public resources to gain partisan advantage.
Indeed, the minister's outline of a budget that has no new tax measures may just be the typical election year budget - in which the sting will come a few months after the national polls, whoever emerges victorious.
In other areas the Finance Minister's announcement that funeral expenses below $100,000 will not be subject to General Consumption Tax as of June 1 although perhaps more symbolic than meaningful given the current general costs of burials, should nonetheless help to ease the burden on persons in the lower income groups. Also of some help is the removal of taxes on certain agricultural implements and herbicides.
The tight financial parameters within which the Government is operating hardly allows for a continuation of the wastage that has characterised much of this administration's tenure. The unpredictable forces of nature also mean that at any time, significant changes will have to be made to the budget.
Now more than ever the idea of a social pact, about which the minister spoke, will have to be accepted as imperative by all sectors of the economy.
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