Dear Editor,
When all is said and done about the budget, basic conclusions being drawn from the different analysts must be reconciled if different. I have already drawn attention to some. I think your paper has a duty to get your Business Page writer, Mr Rawle Lucas and your ex-business page writer, Mr Christopher Ram to reconcile their opposite conclusions. I restate below. I include Mr Ralph Ramkarran’s , not because he has to explain but because he is representing his own or a view which accords with one of the two, and readers will attach some weight to his statements.
The opposing conclusions are too fundamental and important about the 2017 Budget to simply remain unexplained.
Ralph Ramkarran: “Instead, taxation measures reduced burdens on the well off and on companies, while at the same time, the burdens on low and medium income earners have been increased.”
Rawle Lucas: “…the Granger administration has made a conscious decision to reduce the proportionate burden that low-income workers were carrying and to shift it to the well-off.”
Ram & McRae (Budget Focus): “Higher income tax payers will actually pay a lower rate than lower-middle income tax payers. When combined with the changes in VAT, our tax system becomes totally regressive which can hardly be what was intended.”
Mr Lucas is using a different method. He is checking out the purchasing power of the threshold and adjusting it for inflation. I am unable to replicate his figures. Can he provide the inflation rates and their sources? He is claiming that the low-income salary earner would be better off in 2017 than he would have been in 2012 by about $4,000 each month. I am aware that the economists of the world have recently changed their methods of comparing incomes to PPP (not that one – Purchasing Power Parity) and for good reason. However, when purchasing power is used to yield such a conclusion we the reading public need some explanation.
While at it, I wish to point out that there is a material misrepresentation being propagated. It is that a reduction from 16% to 14% is a 2% reduction. I think it needs to be explained that this is a 2 percentage point reduction not a 2 per cent reduction. They are not the same. It is easy to see if the VAT had been reduced to 8% from 16%.
Then on the applicable items half the amount of VAT would now be due. So the reduction by 8 percentage points is equivalent to a 50% reduction not a mere 8%. A little arithmetic would show that the 2 percentage point reduction from 16% to 14% is a 12.5 % reduction on VAT not 2%. (2/16 x 100).There is enough confusion from all sides and we definitely should attempt to bring some clarity to the situation rather than add to the confusion.
Yours faithfully,
Frederick W A Collins
