Dear Editor,
I read on a daily basis about political parties, letter writers and columnists calling for a reduction in the vat @ 16% or removal, a rise in the personal income tax threshold to G$50,000 per month, a reduction in the personal income tax rate of 33.33% and a reduction in corporation tax of 35/40%.
Yet, none of these groups has stated where the shortfall in government revenues would come from if these things were done.
With government expenditures at G$110 billion and revenue of about G$72 billion there is already a shortfall of about G$28 billion that would need to be financed through borrowing. These borrowings would push up the Domestic Debt and would need to be financed from taxes. So to do what aspiring political parties, letter writers and columnists ask for would lead to more borrowing which needs more taxes.
The best way forward in getting the reduction in taxation would be to push for the government to reduce government expenditures/spending to about 80% of government revenues. that is, to reduce government spending/expenditure to about G$60 billion when government revenue is G$72 billion. the excess monies of G$12 billion can then be used to reduce the domestic debt or to cut taxes across the board.
Once government revenues are reduced, then the taxation system can be adjusted, not before.
Yours faithfully,
Sean Brignandan
