‘Read my lips’

“Read my lips: no new taxes!” This phrase was one of the most quoted sound bites emanating from George H W Bush, speaking at the 1988 Republican National Convention, in accepting the Republican presidential nomination. He was seeking to re-define himself as a tough decision-maker and a leader, having been Vice President to the charismatic and very popular Ronald Reagan.

Once in office the new President found out that keeping his promise was much more easily said than done. Facing an increasing Federal deficit by 1990 for which the Gramm-Rudman-Hollings Balanced Budget Act required a mandatory reduction, and with Congressional Democrats and even leading Republicans being in favour of increasing taxation, the President released the following statement, “It is clear to me that both the size of the deficit problem and the need for a package that can be enacted require all of the following: entitlement and mandatory program reform, tax revenue increases, growth incentives, discretionary spending reductions, orderly reductions in defence expenditures, and budget process reform.” The next day the headline of the New York Post in the most unforgiving fashion read, “Read my lips: I lied.”

Just this week our own Minister of Finance, Winston Jordan, appeared to echo the senior Bush when he announced at a press conference that the 2018 Budget will have “no new taxes.” However, before the impact of his dramatic announcement could be absorbed by those present, Mr Jordan went on to say, “I’ve never introduced a new tax, they were all the same tax. All we were doing is playing cards; we were shuffling them around and so forth.”

The use of a somewhat contorted elucidation which sabotages his own punch line is not something one normally expects from a Minister of Finance. The National Budget is a financial and economic plan that the entire country depends on to be a chart of the growth and development of the nation. Clarity is an important feature of such a plan, and from the CEO of a large firm to the wife and husband of a small family, all must be able to glean pertinent information not just from the Budget, but from the President and his Minister of Finance whenever they choose to make utterances surrounding Budget issues.

When George H W Bush made his “no new taxes” boast, it was clear to all and sundry that he was not proposing to hike taxes during his first term in office. When circumstances forced him to consider tax increases, he inevitably suffered from the public’s loss of confidence in him that might have negatively affected his re-election chances, as he then became a one-term president.

The Guyana Minister of Finance can play semantics with the population all he likes, but the expectation that goes with the promise of “no new taxes” is that the tax regime proposed in his new Budget will not be more burdensome than that of the 2017 Budget, and no tax rate increases – or the kind of ‘shuffling’ to which taxpayers were exposed in the last Budget ‒ are expected.

The Minister is known for making much ado about the reduction in the rate of VAT by 2 percentage points (from 16% to 14%) in the 2017 Budget, even though this reduction was effectively eclipsed by him bringing new items under the umbrella of the VAT regime.

This tendency for obfuscation and double-speak by the Minister did not obscure the agony experienced in the first half of 2017 with the introduction of VAT on essential items like electricity, water and private school fees. In his recent press conference he stated that the VAT on private school fees had been given some consideration in the 2018 Budget. Given that the nation had already been made to understand that the government would look again at VAT on private school fees in the coming Budget, everyone is expecting that this will be discarded.  As a consequence, he should not disappoint, at the risk of irredeemable damage this time around to his own and his government’s reputation.

Asked about the non-participation of the parliamentary opposition in his round of “consultations” Jordan was unfazed and unapologetic, saying that the opposition having been invited would ask for documents already in the public domain, or documents which could not be released, and that he had never responded to these requests as they were not a basis for consultation. The Minister comes across all at once as cagey and autocratic, lacking any understanding of notions of inclusiveness and consultation, on which the APNU+AFC had laid such stress before May 2015.

Minister Jordan should bear in mind that there is probably no item more scrutinized in the National Budget than taxation itself, and a tax regime viewed as onerous, however obfuscated, is not likely to instil a high level of confidence in the economy, even as he promises that the 2018 Budget will focus on stimulating the economy. Everyone waits to see whether the Minister will keep his promises.

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