Financial Economist Michael Julien is recommending that the cash-strapped New National Party (NNP) Government of Prime Minister Dr. Keith Mitchell look at a rotation system among Public Servants as a measure to deal with the island’s worrisome financial situation.
Julien, an international consultant for 30 years was a guest on “Sundays With George Grant” when he suggested that all Public Sector Employees should be placed on a four-day rotational work week in order to cut down on wages in the public sector.
He believes that through that method no one will be retrenched by the government.
According to Julien, rotation of Public Servants can work well without the quality of government services being negatively affected.
He strongly believes that if adopted, the government will incur a twenty percent cost saving in the wages bill in the Public Service.
It is reported that out of every dollar collected by government, seventy cents is used on wages and pension, while the other thirty cents is used for debt servicing.
Julien argued that Public Servants can use those extra days for developing new skills, training purposes or setting up small businesses for strengthening their family ties.
Another recommendation made by Julien is for the state-owned National Insurance Scheme (NIS) to consider a rebate to its contributors for a period of five years.
He said that this money will assist the people to increase their spending in the economy.
“It will certainly put millions of dollars back into the system in terms of resources that are needed for stimulating private sector growth”, he added.
The Financial Economist said close attention needs to be paid on the tax exemptions given to investors as part of the country’s future development plans.
He said the country needs to review the significant “giveaways” in the form of tax holidays and tax concessions to foreign and local investors.
In addition, he said it should become mandatory that foreign investors purchase their goods from the local companies and not bring it in directly.
Julien referred to a study, which was done by the Inter-American Development Bank (IADB), which estimated that the equivalent of those concessions represented about ten to eleven percent of the Gross Domestic Product (GDP) in terms of loss revenue.
“The leakage out of the system from the investment concessions, and the leakage out of the system through the informal sector is horrendous,” he said.
Julien, however, suggested that an annual fixed tax should be imposed on the informal businesses to address the escaping of the payment of taxes.
The Financial Economist spoke of having mixed views of the Citizenship By Investment (CBI) Programme.
He said on one hand he thinks it represents a positive opportunity for increasing tax revenue, but on the other hand he believes it will add very little value to wealth creation in the society.
Julien said most of the CBI’s will be absentee owners of property in Grenada.
“So you would get some benefits, you would get maintenance of the property, you would get some visits by these people to the country, but you wouldn’t get real value added going on as a result of the Citizenship By Investment programme unless it is closely linked to investments in comprehensive condominium projects that do allow for transfer taxes to be paid on purchase of property,” he said.
Julien believes that the number one priority for Grenada is to create a programme aimed at attracting foreign residents who are professionals and have the capacity to earn most of their income overseas to come to the country and live here.
This, he said is extremely important as Grenada’s population growth rate is not sustainable and put it at about half of one percent annually.