Introduction:
In macroeconomics, a recession is a decline in a country’s gross domestic product (GDP), or negative real economic growth. An alternative, less accepted definition of recession is a downward trend in the rate of actual GDP growth. A recession more ambiguously as “a significant decline in economic activity spread across the economy, lasting more than a few months.” A recession may involve simultaneous declines in coincident measures of overall economic activity such as employment, investment, and corporate profits. Recessions may be associated with sharply rising prices (inflation) in a process known as stagflation.
Although the minimum public sector wages were increased over the years, the purchasing power has been reduced, due to the high inflation rate of 13 %. When VAT is taken into account, along with a 19.1% increase in food items over the last six months, there is a big increase in the cost of goods and services. Every day we see on NCN TV how minimum wages have increased over the last 15 years from 3,000 to 28,000, but we never see the other side which shows that the purchasing power of that same dollar has decreased over the last 15 years. Based on Present Value Tables, $1: in 1992, with a 10% Annual Rate, will buy goods and services of 0.24 cents today. Add inflation to that number and it decreases even more.
USA’s Newspaper columnist Sidney J. Harris distinguished terms this way: “a recession is when your neighbour loses his job; a depression is when you lose your job.”
Proposed Economic Stimulus Plan (Summary Plan – Detailed plan available)
Tax Reduction to spur economic activities
a. I believe in the supply-side economics which suggest tax cuts to existing and new businesses promote business investment.
b. Tax cuts to individuals, will enable more purchases, preferably to buy local products.
c. G$10,000: Government Rebate Cheque to all persons on the lowest level of taxable earnings, and below, with a TIN (Tax Identification Number).
d. A significant reduction in income tax and VAT. Specifically a reduction of VAT to 7% which will equal the real need of the Government since they collected over 40% more than they thought they needed.
e. In addition, an increase of the tax threshold to 50,000 which will deflect the significant rise in inflation.
Public Private Partnership (P3)
Develop a public private partnership (P3) to pursue real opportunities where people can have jobs. This should include micro loans to citizens for business ventures. Concentrate on depressed communities initially.
Results and Expectations:
What will happen when new money is infused in the economy?
Every dollar spent can have a multiplier effect of at least ten times, which will create more business transactions, with more revenue, and more taxes to be paid to GRA. In a true free market economy, citizens, entrepreneurs, and businesses, are the key drivers to economic progress, with very little interference from elected governments. All Guyanese need our elected leaders to actively pursue free market economic policies, to enable all to achieve an improved quality of life. Until next time “Roop”