Howai should encourage spending to stimulate the economy
THIS is addressed to Minister of Finance Larry Howai.
I think the simplest and most effective way of helping to stimulate the economy would be to encourage spending.
Spending stimulates business activity, it encourages businessmen to invest more of their profits back into their businesses through expansion of facilities and manpower, thus lowering unemployment and increasing business activity, which in the long-run would lead to increased tax collections.
The best and most effective way to achieve this is to simply increase the personal allowance from $60,000 per year to, I suggest, $180,000.
This radical adjustment automatically precludes persons earning less than $15,000 per month from paying taxes.
Why is this important? Well, the majority of persons earning $15,000 or less would fall into the middle class. This automatically increases their spending power, and the amount of money available for savings, say, for a new home or purchase of land.
Also, the cost of living has gone up tremendously since this allowance was raised several years ago. It also means the majority of public servants would be paying no taxes.
This is something that unions should be lobbying the government for also, as it benefits their membership directly.
Secondly, an incremental increase in the price of both premium gas and diesel, in the order of, say, 50 cents. It is a 33 per cent increase in the price of diesel, but we have to bite the bullet now if we are really serious about lowering the subsidy on fuels.
If the subsidy was really $4 billion, then this increase would cut $1.3 billion immediately.
Finally, the issue of VAT returns to businesses. This process needs to be sped up, as some businesses are on the verge of closure, especially those that are buying VAT inputs to sell zero-rated products.
The cash flow is severely hampered, and solving this issue seems to be a problem, no matter which government is in power.
Remember, happy investors will always look to re-invest or increase their investments.
Roger D Gopaul