Former P.M. has last laugh on taxation

He was demonized by the People’s United Party in its successful 1998 election campaign as the dreaded VATMAN, the wicked U.D.P. Prime Minister who imposed a burdensome and unfair Value Added Tax on an already suffering citizenry. Well, on Friday that same VATMAN, former Prime Minister Manuel Esquivel, watched as seven years later Cabinet Minister Jose Coye finally admitted that maybe the VAT wasn’t such a bad idea after all. Today News 5’s Stewart Krohn asked Esquivel how he felt about the recent turn of events. As is his trademark, the former P.M. was low key, even in what should have been a moment of extreme vindication.

Manuel Esquivel, Former Prime Minister
?I was aware in ?98 after the election, the new P.U.P. government set up a committee with various citizens on board and Mr. Coye was the chairman of that. And I saw their report to the government in which they said they thought that the structure of the VAT was in fact a sound structure and it should be kept and perhaps the government might want to consider lowering the rate. But that was their recommendation, and as he has said subsequently, for reasons unknown to him, the government decided to ditch it anyway. Well we all know the reason, it was a political reason. They had won an election as you say, vowing to abolish it and they meant to do that whether or not it made economic sense, because to them it made political sense.?

?I don?t even know if his current advice will be listened to because, again, I am convinced that throughout all of these problems we are having the politics of the situation has taken precedence to the good sense and economics of it.?

The former prime minister consistently maintains that he has retired from electoral politics, but it is clear that U.D.P. Leader Dean Barrow will rely heavily on Esquivel’s experience should his party ever take over the reins of government. What advice would he offer?

Manuel Esquivel
?The position on economics really, is first of all makes it very clear that there are no easy solutions. Every solution is going to be painful because the situation has grown so terrible. But the solution has to lie in the government itself making most of the sacrifices plus atoning for what has happened before there can be any kind of question of the general population making the sacrifice. So when I say that I mean, we have said repeatedly and we say it now, that the problem that the P.U.P. government has is a lack of credibility, it?s the lack of willpower to do what it necessary?I believe you yourself has said that on occasion?and we feel that those two things make it impossible for them to find a solution. It?s one of the reasons why they keep saying, ?we are rejecting the I.M.F., this is home-grown?, when everybody can see that it is identical to what the I.M.F. is doing. The added difficulty is they are trying to implement what the I.M.F. agrees needs to be done, but at the same time they are pretending they can do it without the help of the I.M.F.–and I?m talking about financial help. And they themselves have said, without the imprimatur of the I.M.F., at this stage of the game nobody is going to trust them, nobody is going to believe them. And so our position has always been that is why we insist, there has to be a resignation of government, there has to be a new government, because a new government, particularly the United Democratic Party as government, can gain the trust and can gain the confidence of what they call the international financial institutions such as the World Bank, the I.M.F., the C.D.B., I.D.B. And all of these players will be required to put things back on track. And we think we can do it, where they can?t.?

Stewart Krohn
?Mr. Esquivel, on two occasions–in 1984, and perhaps to a lesser extent in 1993–you were called upon to take the country out of a financial crisis of sorts. How would you compare the situation in 1984 and 1993 to what the country faces now??

Manuel Esquivel
?In 1984, you may recall–I think you?re old enough–that in that year leading up to the elections in December of 1984, the government raised taxes twice. And again, it?s like an echo from the past, they were saying as they are saying now, to avoid devaluation, and they found that it wasn?t working. So they went to the I.M.F. and they entered a standby agreement. So when we took office in mid-December 1984, probably the first people in my office were the people from the I.M.F., saying here is the stand-by agreement we have with the government, let?s see how you?re going to deal with that. Fortunately for us I think we, one, were hungry enough as well as I might say wise enough, to turn to the experts, Belizean experts who were available to us. And what stands out in my mind is Sir Edney Cain for example; we brought him back from Washington where he was Ambassador to the Financial Secretary. And it was men like that, plus the determination of the U.D.P. government to comply with the agreements made with the I.M.F. that saw us through it, so that in eighteen months we were able to correct the situation. When we took over in December of ?84, the foreign reserves were not only down to zero, it was negative.?

Stewart Krohn
?In any future campaign, electoral or otherwise, it?s pretty certain that the party now in power will characterise the U.D.P. as the party of mass retrenchment, of wage cuts, of all kinds of things that will negatively affect the pocketbook of the average Belizean. Knowing that is likely, what does your party do to counter that kind of campaign??

Manuel Esquivel
?Well I would say if that is a weapon they would want to use, then they should call elections now. Because the longer they wait the more that will be a description of their party, because they are the ones who are now saying retrenchment, who are now saying cutbacks in increments, who are now saying more taxes, they are the ones. They are saying seventy million dollars now more in revenues on top of the fifty-two million just a few months ago. And I notice they say seventy million more in revenue, which is a code word for tax. But nevertheless, what I?m saying is if that?s going to be their weapon, they better call elections now before they are forced to become that party that you have described.?

Esquivel says that a new U.D.P. government would not rush to introduce new taxes but would only go that route after it first eliminated the waste and corruption that he claims now infests the Musa administration. By cleaning up that blight, the former P.M. believes his government would have established the credibility necessary to make the inevitable tough decisions on economic policy. The U.D.P. will officially unveil its manifesto on that subject at a press conference on Wednesday.