Coye: budget reforms are working
They failed to reach their budgetary targets and have imposed stiff new taxes on free zone and real estate transactions without any warning or consultation… but one of government’s financial point men says that G.O.B. is getting a handle on the situation. According to Works Minister and finance committee member Jose Coye, reforms undertaken over the last six months are producing positive results.
Jose Coye, Minister of Works
“Reform is not something you will be able to do within a year or two years. As I said before, it’s not an event; it’s a process we are involved in. And yes we have started reform in terms of the fiscal and monetary policies. We have put in place structures that are to ensure now that the budget?certainly in the formulation?will be done differently from in the past. We have put in place a new finance and audit act, the public accounts committee has been activated, we are bringing the audit reports up to date. So when you look at the budgetary cycle, in terms of oversight, certainly there is a lot that have been put in place, but we are yet to see the results of them. When it comes to the revenue side, we are still in the process of making recommendations from the tax reform committee to the government regarding tax policy and tax administration.”
According to Coye, the tax committee has been working for three months and should have its recommendations ready by the end of September.
Among those recommendations is likely to be a proposal to simplify the administration of the tax system. For Coye, this means focussing on a small number of revenue sources.
Jose Coye
“Rather than have this multiple taxes, some twenty-five, twenty-six taxes, which we have presently, they are certainly not in the interest of administrative efficiency, nor in the interest of compliance efficiency. So we expect to put forward recommendations that will be addressing these and we believe that we should look at taxes that will cover some consumption, taxes that will cover business in investment and of course the employees. So there are really three to four main categories and we intend to make those recommendations to bring it down to that.”
Stewart Krohn
“Minister, let’s look at expenditure, particularly capital expenditure. Looking at the numbers it is almost as if there is a freeze on capital expenditure. Any government can sustain something like that for the very short term, but basically what governments exist to do is to build roads, build hospitals, build schools, things like that. How much longer can government function and remain politically stable without building basic infrastructure?”
Jose Coye
“Stewart I think this is very important, the question, because what I sensed has happened, the government has been somewhat ahead of itself. We have been building very much into the future and as the Minister of Works now, I can use roads as an example. The amount of roads that we have built, the highways in particular, are way into the future. So what we have invested in terms of highways, we have no need to invest except in now maintenance of those roads. We have put over four hundred million, now that is unprecedented. So if you look at the government capital investment, if you are to look at it in a balance sheet sense, we have a tremendous amount of assets there now invested in this country, there is no doubt about it. If you put it in terms of plant assets, we have the capacity now to expand the economy. The productive sector I think has a wonderful opportunity and despite what one may say about?certainly we went up into the upper limits of borrowing and I am not saying that well that is all justified, but if you look at the capital investments that this government made over its two terms, it’s a tremendous amount of investment and that will certainly benefit the productive sector.”
One group less than satisfied with government’s fiscal policy are those merchants operating in the Corozal Free Zone. On September first a statutory instrument raised the tax on liquor and cigarettes entering the zone from one point five percent to ten percent. News Five understands that Prime Minister Said Musa has agreed to meet with representatives from the zone later this week and they are proposing that instead of the ten percent levy on booze and smokes an across the board two and a half percent tax on all goods be substituted.
