The
people must trust their leaders; politicians, lawmakers and members of the
executive or cabinet, and leaders must be worthy of such public trust, for
progress to be achieved for all the nation's peoples. Unfortunately, the ideal circumstance,
for all groups in a society to agree and act together, is at the very end of
self determination, when desperation sets in! Prescriptions to cure an economy
in recession, achieve sustainable development, and constantly improve standards
of living for all the people, are bitter and require sacrifices from all
society's groupings. While, preventing harsh adjustments require a fair
distribution of wealth and the building of reserves.
An
economy, heavily dependent on taxes and royalties income from petroleum based
industries, at the mercy of international prices, which has suffered huge recent
declines, closure of operations, job losses and the rippling effect on other
commodities global prices, must strengthen its cash flow position to meet its
current obligations; via reductions in estimated expenditure, withdrawals from
existing savings and investments, and obviously, by means of new borrowings. While,
diversifying and intensifying sources of income; via
increases of expected taxation revenue, through the
increase of productivity output, by examining all prudent competitive
advantages within its moral and legal economic means and
by assessing its feasibility to maintain revenue growth.
To
reinforce its cash flow position which has and is forecasted to suffer from
long-term declines in international prices; the nation’s leadership implemented
changes to the Value Added Tax (VAT) regime to remove social benefit
components, which have been spread throughout the population, rather than only
targeted those who are in-need-of such social assistance, while, it reduced the
VAT rate to soften inflationary impact. The leadership also increased the
Business Levy and Environmental Tax charged on corporate sales. The nation’s
leaders also prepared its people for an additional taxable charge on online
shopping items imported via air freight, and for a new income tax bracket
targeting the top individual and corporate earners in society.
The
nation, in an effort to preserve and increase its foreign currency reserves and
to manage its local currency exchange rate, made adjustments to its motor
vehicle importation licensing regulations, with the effect to quicken the
switch between vehicles using expensive and subsidized (gasoline) liquid fuels
and cheaper more environmentally friendly (natural gas) gaseous fuels, at a
time when international petroleum prices effectively decreased the nation’s
fuel subsidy. A review of the Government Assistance for Tuition Expenses
(GATE), other subsidies and social programmes was undertaken, to better reach
and serve the intended target segment of the population, who truly needs and
deserves such public assistance, hence inviting changes, further reducing
annual expenditure.
The
nation redirected allocated estimate expenditure and incentivize private
investment to modernize and expand local production and stimulate local
consumption; within the housing sector to expand the nation's housing stock via
home construction projects, and in the agriculture sector to increase the
nation's local food stock, expand agribusiness and to reduce the nation’s food
import bill, both with the aim of added benefits of job creation and its
resulting increase individual income tax revenue.
The
first ever withdrawal from the nation’s Heritage and Stabilization Fund, the
country’s existing savings and investments, was found to be necessary by the
leadership to fortify its cash flow and meet upcoming obligations towards debt
servicing and recurrent expenditure.
New
borrowings are projected for the foreseeable future to balance the nation’s
annual financial budget, pending the increase of petroleum local production
levels along with the recovery of international prices or substantial revenue gains
resulting from other newly developed local sectors and industries. Note, the alternative
is individuals and corporations tax increases.
A
new High Income Tax bracket, equal to 30% of earning more than 1 million in
local currency per year, has been implemented on both individuals and
corporations. A new Patriot Tax, on citizens who benefited from GATE and other
free local human development (educational and health) programmes and are presently
employed aboard, is currently being designed. This patriotic tax, on individual
that accessed human development benefits locally and chooses to work aboard, is
proposed to be 1% of annual salary, payable in the same currency of the said
salary. Also, work is still being done on a new property tax regime.
Several
initiatives are proposed to boost the nation’s productivity through infrastructural
development and improving efficiency, such as highway and sea port expansion
that would reduce traffic jams and time spend in transit. The nation’s many
profitable assets also stand ready to be listed on the stock exchange or auctioned
to raise needed cash, before having to approach the International Monetary Fund
(IMF), which would impose the same or more stringent conditions.
Identifying
Feasible Competitive Advantages and realizing market share is the only avenue
to achieve revenue diversification and release the nation’s profound dependency
on petroleum products. The nation must aims to increase economic drivers and
efforts to widen the range of products horizontally and vertically over the
medium to long term. With long term projects, such as; natural gas pipeline
networked to other neighbouring islands, with stable pricing strategies to earn
foreign exchange, and augmented by renewable energy sources, hoisting wind and
submerging tidal turbines along the line, which will meet climate change goals
and reduce regional electricity bills.
The
constant development, promotion and protection of the nation's brand as it
relates to tourism, arts, music and culture, agriculture, manufacturing, human expertise,
and marketable investments, with an strong emphasis on patented benefits to the
nation, is key to such diversification efforts.
Rationale
T.A.J& Associates Company Limited uses this occasion to
comment on topics that have been covered, both academically and by the
mainstream media, to add its opinion and point out investment opportunity, not
to invoke any social action.
