By Gerry Hopkin
We may eventually have to add new taxes and/or increase levies in order to pull ourselves out of the deep economic hole that we have slid into.
But we need not rush into such a mode. Before we do so, we must seriously embark on the following, lest we add more stress and burden to struggling Grenadians who are already suffering:
(a). WE MUST GROW OUR ECONOMY by innovatively producing more – concretely doing more in the productive sectors in a sustainable manner:
(i) especially in agriculture/agribusiness where we can add value to more of our local produce by processing, consuming and exporting more of what we grow (spices, herbs, fruits and vegetables) and rear (animal protein);
(ii) harnessing, upgrading and better packaging and marketing our tourism, health, education and hospitality services;
(iii) fast-tracking our energy development by adopting a diversified approach which engages various partners (friendly foreign national entities and agencies with experience in this area (T&T, Venezuela, China, U.S. and Nigeria), as well as private companies such as Shell and BP which can finance and carry out the exploration;
(iv) maintaining, upgrading and moving forward with our lead in ICT, as we take better advantage of opportunities, such as those afforded through the training centre which was offered to us by the Government of India.
(b). WE MUST ALSO SERIOUSLY DO AN EFFICIENT JOB AT COLLECTING FUNDS CURRENTLY DUE FROM INDIVIDUALS & ENTITIES (especially those in a position to pay back) TO THE NATIONAL TREASURY AND AT COLLECTING TAXES/LEVIES DUE UNDER EXISTING LAWS.
Reliable sources have indicated that uncollected funds due to the Treasury may exceed EC $500 million:
(i) We must seriously go after those who owe the government and people of Grenada in a manner that shows no political curry favor. Leniency and sensitively structured terms should only be extended where one’s real and objective hardship or inadequate means, constructively preclude re-payment or payment.
(ii) We may deliberately seek to end waste of public funds:
(a) by having government offices share and make optimal/efficient use of space and equipment such as printers; and
(b) by renovating and using more abandoned government buildings with NIS funding, instead of paying big money to private landlords. (Some of these buildings may be renovated by Imani interns under Professional Contractor supervision as part of a Certificate Program; and upon completion, some of the space in these buildings can be rented out to private entrepreneurs at reasonable rates.)
(c). WE MUST WALK THE TALK OF ENERGY CONSERVATION AND CLIMATE CHANGE MITIGATION & ADAPTATION:
(i) by making better cost-saving use of natural lighting in the Ministerial Complex (and other government buildings), specially designed with functional large glass walls/windows to preclude the use of electric lighting from 8 a.m. to 5 p.m. (Because electric bulbs generate heat, not using them as much as currently done, would reduce the need for AC in these offices.);
(ii) by taking full advantage of the PRC’s (China’s) offer of assistance to install new energy-efficient LED bulbs in all government buildings, which would save us MILLIONS of dollars, being cognizant of the high cost of electricity in Grenada; and
(iii) by taking deliberate steps to exercise leadership and influence in fast-tracking the development/tapping of the alternative energy potential in Grenada, which ought not be controlled by a privately profit-driven GRENLEC, which stands to make less profit when we encourage more of our people to use alternative energy. (Some degree of balanced government intervention is needed in this area, not necessarily in terms of share-holding, but necessarily as it relates to pricing, as provided for in the original legislation.)
Consistent with the role Grenada has played as a global leader on the issue of climate change awareness and the need for fervent proactive and reactive action, more grant proposals for funding of developmental projects which advance a progressive agenda of conservation, mitigation and adaptation in Grenada’s environment, thus sustaining our nation’s beauty and productivity (our agriculture and our tourism product), must be pursued.
(d). WE MUST ESTABLISH A GRANT PROPOSAL RESEARCH & WRITING DEPARTMENT, possibly within the Ministry of Education or the Ministry of Economic Development, which ought to be charged with the responsibility of sourcing funding via research and proposals to international, governmental and NGO organisations and agencies.
Such a department would have trained grant-writing officers who would each be assigned to specific identified areas (covering every government Ministry) that are ready and viable for development.
It is a well known fact that each year, millions of available dollars in organisations such as the UN and EU, go unutilised due to our failure to submit grant proposals.
In a world where governments in the developed world are hardly giving non-interest bearing aid (grants) to countries like Grenada, it is imperative that we leverage our global profiles and human resource abilities to tap into available grant funding.
Considering the limitations of Grenada’s tax base (the taxable individuals and entities in our small population), I am of the calculated view that we can potentially raise more funds through well-written grant proposals for development purposes, than we can ever raise collecting taxes.
(e). WE MAY ALSO PURSUE A DEBT FORGIVENESS/JUBILEE initiative as a part of our multi-faceted approach to addressing the heavy, unbearable burden of our debts, of which some are illegitimate or ill-gotten.
I agree with the message, spirit and purpose of the recent open letter of Grenada’s Minister of Economic Development and Trade, Hon. Oliver Joseph and with Father Sean Doggett of the Conference of Churches in Grenada, when he says:
“The effects of Grenada’s indebtedness are causing the poorest to suffer pain that the peoples of few developed countries would find tolerable. Our young people face a future of hopelessness and joblessness.”
It is common sense for us to pursue negotiating debt reduction with our lenders, so that our debts can be reduced to levels which allow our nation to alleviate poverty and secure meaningful livelihoods for all, rather than implementing austere measures in an almost hopeless quest to deal with our debt.
However, this must only be one of the explored approaches to addressing our debt crisis. In other words, as we say in Grenada, we cannot put all of our eggs in one basket, especially not singularly in one which essentially appeals to the moral heartstrings and historical sensitivities of profit-driven debtors.
(f). THE WAY FORWARD
The thesis of my commentary is that we ought not to implement a structural adjustment initiative in Grenada at this juncture, which resorts to lowering the threshold and raising the rate of income and property taxes, lest we further constrict development and economic activity.
It is advisable, relying on best practices and the experiences of other rapidly developing states, such as Singapore, Malaysia and even Guyana, that we focus on implementing initiatives such as the ones outlined above, in lieu of higher taxes and retrenchment.
If we decide to go the way of higher taxes and retrenchment, we would be negatively harming our small and large business owners, as well as working class Grenadians and non-nationals, whom we need as investors, as much as we need our nationals in the Diaspora.
Higher taxes generally tend to function as a dis-incentive to new investments, which we need more than anything else right now, if we are to seriously climb out of the economic hole which we have slid into.
As one local businessman puts it, “Besides giving more serious attention to real development initiatives, we should collect the outstanding monies owed to the government for defrayal of our debts, before we impose increased and new taxes on our people. Those who owe the government and people of Grenada should pay up before we ask the small man to cough up more than he is already paying in VAT, etcetera.”
May common sense and economic prudence prevail over policies which reflect the sentiments and profit-driven motives of the banking community’s interest, as historically represented by the IMF. I am saying this, notwithstanding the new, more nuanced and apparently more sensitive manifestations of the IMF, which is no doubt influenced by the refreshing perspective of the new president of the World Bank, Japan’s Dr. Jim Yong Kim.
I dare say, premised on the philosophy and track record of Dr. Kim, that our leaders, Opposition included, should directly make our case to him, beseeching his consideration and endorsement of measures which stay clear of austerity, while embracing the sustainable development approaches advanced above.
(Gerry Hopkin is a former aide to former Prime Minister Tillman Thomas)