Minister admits errors but defends budget

With a career that includes a long stint as a public officer as well as a private accountant, Minister of Works Jose Coye has a unique perspective on government finance. Although he was one of the leaders of the August cabinet revolt, Coye chose to stick with the Prime Minister following the P.M.’s commitment to financial reform. On Wednesday News 5’s Stewart Krohn sat down with Coye and asked him to defend his government’s budget.

Jose Coye, Minister of Works
?The talk of reform has been around for quite some time. The talk of accountability has been around for quite some time. I believe that the process and the principles that guided this budget is in fact to me the beginning of reform of the budgetary cycle and oversight of the public finance.?

Stewart Krohn
?Minister, let?s break down and look at some of the actual new taxes that are imposed in the budget. Looking at the so called environmental tax, I think the case could be made that it?s really a sham. This tax has nothing to do with the environment. It really resembles the old stamp tax that used to be on imports that was eliminated with the CARICOM external tariff.?

Jose Coye
?If you believe it?s a misnomer or you believe it?s a sham that it is not being used for the environment, then fine hold us accountable to use if for that. The truth about it is that when you look around this country and as former mayor of this city, from then we realized that the disposal of our waste is not the best way we were doing it.?

Stewart Krohn
?If what you are trying to tell me is that that three percent environmental tax on imports is going to be used to clean up the environment why don?t we create a special fund that that tax money goes into? Because as I understand it that money goes into the consolidated revenue fund. Yes or no??

Jose Coye
?The environmental tax was index as an environmental tax; index in the budget. In this round, it was brought in within the consolidated revenue in the sense that there a line item for it. It is there. And yes, we need to use it for the environment.?

Stewart Krohn
?What guarantees that that money would be used for environmental expenditure??

Jose Coye
?Well the question could come back. What guarantees that all those line items in the budget be used for what they said. The guarantee has to be and that?s the point I need to make. Going to the House and get a budget approved by the House with the majority on the Government side. It?s not the end of the budget cycle. It?s the beginning. And the point I want to make strongly to the nation, the Cabinet is an institution of management, the Government; the House of Representatives or the National Assembly is the institution of accountability. Passing the budget on Friday in the end, the truth about it is that we don?t walk away from it then. We must ensure now that the spending side, which is the second phase in the cycle of the budget, is being accordance with the budget and spent with the occupational or operational efficiency that we have agreed to. We must put all these measures in control to ensure value for money.?

Stewart Krohn
?Looking at the no taxes on various types of wage earners, you hit the realtors very hard going from four to fifteen percent. There are not a whole lot of realtors political you?re saying. But when you look at the tax on professionals doctors, lawyers, architects, the fairly wealthy people, their tax burden only went from four percent to six percent. Shouldn?t people like that be shouldering a larger share of the tax burden??

Jose Coye
?Well, Stewart I would be the first to agree with you. To begin with, I don?t believe that the business tax has any precedent in the world. It?s a tax that was designed for simplicity not equity and that is what we need to understand. The business tax has no precedent. Any taxation especially when you are dealing with your direct taxation and indirect taxation, a fundamental principle is the simplicity and equity and in simplicity and equity in any taxes spent there is an inverse relationship. You move to one, you move away from the other. To go away from equity to simplicity because of a weak tax administration is the failure of the governments of the past. They should have strengthened the tax administration; keep the tax, incomes and profits; make it clearly a direct tax, which is a form of the distribution of the incoming of the economy. But to me, the whole tax systems need to be reviewed and that?s a fact. So I agree with you with that.?

Stewart Krohn
?Why those rich people get off so easy??

Jose Coye
?So, let?s come back now to the question now of when you started this business tax and you put a rate on it on the gross receipts. How does that gross receipt reflect the tax that you were suppose to pay and the profit that they believe you were making? None. Because no proper analysis was done. The business tax as I said has no mechanism to it. It has no rational except to say that the intention was to get you to pay based on what your profit should have been and because they claim that the tax department was not strong enough to ensure that they collect it, they changed it. I am saying indeed to move from four to six is still moving in a direction rather than where it is before. It started at two percent. This Government has moved it to four and its moving it to six now because we are beginning to do analysis of the tax as a business tax.?

Stewart Krohn
?Under the most charitable scenario that you can come up with without any accusations of corruption, without any accusations of trying to facilitate thievery on the part of certain people. Even if you look at what Government did over the last six years in terms of financial management. Even in the best light, you would have to say that this Government screwed up big time.?

?D.F.C. was destroyed, S.S.B. funds were severely endangered, borrowing was excessive, the monies that were borrowed were squandered and used as projects. These were things that you yourself have said in the past. If you take that as a given, can you really blame the public for being so absolutely pissed off at this Government? Can you blame them??

Jose Coye
?Well Stewart let me say first your judgement and your choices of words are different from the words that I did use. I am prepared to admit that there were these mismanagement and they were these miscalculations, but I will not exaggerate them. As a Minister of the Government and I think as an area representative, I think I have to be quite professional and dispassionate in my judgement and my assessment.?

Stewart Krohn
?Well you thought they were serious enough to resign from the Cabinet. That?s pretty serious.?

Jose Coye
?Yeah.?

Stewart Krohn
?You don?t resign from Cabinet for peccadillo.?

Jose Coye
?That?s what I said; the difference between us is not to whether there was mismanagement. The difference between us might be the quantification and the financial consequences. That?s where we can differ.?

Stewart Krohn
?I am not going to let you go on that Minister because you don?t resign from Cabinet over foolishness. You resign from Cabinet over serious things. You had to think this was a serious thing.?

Jose Coye
?Of course it is serious.?

Stewart Krohn
?So don?t try to minimize that they were. They were serious.?

Jose Coye
?What I am trying to say to you. What has been the lost of the S.S.B.??

Stewart Krohn
?I said that you endangered S.S.B. funds.?

Jose Coye
?I agree with that.?

Stewart Krohn
?We can split hares and say no money has actually been lost but that is not the point. If you want to talk, let me ask you how much money was lost at D.F.C.? Was the institution destroyed or was it not? Your Government is liquidating it.?

Jose Coye
?What the Government is doing is liquidating assets, not the D.F.C. as an institution. The D.F.C. as an institution is still under study as to what we…?

Stewart Krohn
?Well, you better read your own Government?s press releases Minister.?

Jose Coye
?No, no. I read it good because we made that decision to liquidate assets, not to liquidate the D.F.C. What we are doing with the D.F.C. and maybe I should say this here and now to make it clear. Certainly we are in discussion with the C.D.B. and the I.D.B. for us to determine whether there is a need and we believe there is a need but in what form should it be set up. That?s a different discussion that we can have.?

?But coming back, the point you made is well. I take your point to be correct. The resentment being demonstrated today and the contempt and the anger simply did not flow certainly from the raising of taxes. And say simple not to mean that the raising of taxes is simple. But I say it to emphasise the point it flows from the distrust, which was brought because of these things you referred to. And my only difference with you was in terms of how you would quantify it and how maybe I am quantifying it. But please it has nothing to do with cause this kind of feeling. And I agree with you with that. That is why the challenge for us now for us to be able to restore the trust and confidence. Every effort must be made indeed to show that we are prepared to change and do things differently and that we?d be there to retrench and institutionalise not just for the next year or the two years. But it will be there for generations. That is what we need to do.?

Stewart Krohn
?If the CEO of a large corporation messed up the way our country?s CEO, namely, the Prime Minister did is clear that he would be fired on the spot and fired in the most ignominious way possible, couldn?t the case be made that in view of the total and utter financial mismanagement by the Musa administration that Said Musa as Prime Minister, as Minister of Finance really ought not to have his job anymore??

Jose Coye
?Stewart if one makes the case that he should and it is his decision that he should not. I think democracy as we practice it and the constitution allows him to do that. Now you could ask the question about what is the opinion of those who are in the Cabinet and quite frankly, I am prepared to say that there were things indeed that were different but one thing I must say is that the Prime Minister is committed to make the change and he accepted the criticisms. He accepted them and he has an obligation as the Prime Minister that whatever may have gone wrong. What ever wrongs he presided over, he now must preside over the corrective measures and the changes. That much I think he knows and he?s prepared to do that. I am convinced that he is committed to that.?

Stewart Krohn
?Other than punishing your Government at the polls in a little over three years time, what would you have those people who are fed up and dissatisfied and really no longer have any trust in your Government. What would you have them do for the next three years??

Jose Coye
?I think for the next three years, they should continue the pressure to hold the Government accountable to do the reform that we are committed to. So that it is not only the Government at the end of the day that will be removed, but the good that will come from it is that every successes Government will be held accountable and that the transparents will be there. So if at the end of the day yes, we created the problem, we must make sure that we do the corrective measures and find the solutions. As the Prime Minister said, not just for the next elections, not even for the elections but for the next generation and for Governments to come.?

In answering a final question about the departure of former Cabinet colleagues Mark Espat, Cordel Hyde and Eamon Courtenay, Coye said that he hoped that the three would stand by the principles that guided them in August.