Dear Editor,
In any economy, two-thirds of all economic growth rate lie on the consumers’ outlay. Of note, fiscal regimes should always have mechanisms in place to proportionately adjust economic activities between supply-side and demand-side economics in the economy so as to maintain the flow of consumers’ spending. Inasmuch as public expenditure and business investments are vital elements for cash injections and act to stimulate the economy, these activities have a direct bearing on demand-side economics. The crucial aspect of supply-side economics should be to target measures which supports consumers’ spending from their Direct Income in order to maintain a positive and progressive economic growth rate in the economy. In context, some fundamental measures which would support supply-side economics are:
1) Increase salaries and wages to match inflation in order to maintain purchasing power.
2) Lowering or adjusting of taxes (PAYE, VAT, etc.,) to cushion price increases and maintain purchasing power.
3) Lowering of interest rates on consumers’ loans and advances and by extension mortgages (and business loans) in order to boost disposable income.
4) Maintain local currency stability and narrow the percentage spread on foreign currency exchanges in order to maintain purchasing power and lower prices on foreign trade.
5) The use of the Consumer Price Index: (1) serves as an economic indicator in measuring inflation faced by the end users – consumers that is, and, (2) provides cost of living adjustments for salary and wage earners and acts to stave off any inflation-induced increase in taxes.
These measures can be viewed as a proxy for the effectiveness of government’s economic policy.
By such ways, the platform will be set for both consumers’ income and disposable income to be on the rise, which would restore consumers’ confidence and at the same time facilitate consumers’ spending and cash circulation in the economy. Furthermore, once higher disposable income is available and consumers’ spending is visible, that is a positive signal for investors, businesses, and the economy as a whole.
Sincerely,
Paul Ramrattan
