As it becomes imminent that more Grenadians will now have to pay Personal Income tax, the Grenada Trades Union Council (TUC) is calling on government to thread cautiously in its approach in making increases on the tax level.
Second Vice-President of the TUC, Kenny James said if the income tax ceiling is to be lowered there must be some considerations on the manner in which it is being done by government.
James who was at the time participating in a National Social Partners Forum on the planned debt-restructuring programme by the seven-month old Government of Prime Minister Dr. Keith Mitchell said government must bear in mind that people already have mortgages and are currently struggling with very little disposable income.
“We have to come to the realisation… that we have what we can call ‘the working poor’ in our society who are just able to operate from pay cheque to pay cheque, paying the basic utility bills and who can’t even afford medical insurance,” he told the forum.
James, a past President of the Grenada Union of Teachers (GUT), acknowledged that in most of the territories in the region the threshold of income tax is lower than in Grenada.
Currently, the income tax threshold stands at $60,000 annually.
However, James called on government to make a greater effort in revenue collection by incorporating other groups into the tax net who, he said, in some instances have been delinquent.
He stated that the TUC is of the conviction that the country’s tax system must be just and fair, and the collection must be more effective.
Prime Minister Dr. Keith Mitchell has often pointed an accusing finger at persons in the professional services especially lawyers and doctors for
not paying their fair share of income taxes.
The TUC Second Vice-President also urged government to ensure that there will be no retrenchment of public workers as the regime attempts to tackle with a national debt of just over EC$2.3 billion.
The Keith Mitchell-led New National Party (NNP) government in St. George’s has decided to default on debt payments due to international creditors and wants to engage them in debt restructuring.
James said that in an economy where the unemployment rate is forty percent, any further loss of jobs could have catastrophic socio-economic consequences on the society.
The TUC proposed that government redeploy civil servants through the use of a proper human resource audit that would serve as a job-saving measure.
James also proposed that a levy on cellular phones be introduced by the State as a means of increased revenue collection.
He believes that for most people, the cell phone is a luxury and not a need.
Permanent Secretary in the Ministry of Finance, Timothy Antoine who was one of the panelists reported that on a monthly basis there is a shortfall of $18M to cover government’s expenditure.
Antoine disclosed that government collects an average of $35M monthly, but spends an average of $53M.
He said that for every dollar the government collects, seventy cents are spent on wages and pension, while the other thirty cents are used on debt payment.
Most of the island’s debts were created by Dr. Mitchell in his earlier stint as Prime Minister from June 1995 to July 2008 when it moved from EC$373.3 million to EC$1.8 Billion.
Executive Director of GRENCODA, Judy Williams who chairs the Civil Society groupings said that the Non-Government Organisations (NGO) are in daily contact with the people who are hurting most and are in need of relief.
“I am talking about single parents, farmers, women, the elderly, the disabled,” she told the Forum.
Williams charged that the financial debt management of the country has been poor and this is a reflection of the broader issue and malaise of governance and accountability.
“We (the NGO’s) feel compel, therefore, to ask for an examination of the process which lead us to the current reality, for if we don’t, the likelihood is that we will repeat it, it will come back to haunt us somewhere down the road,” she said.
The Mitchell government has approached the Washington-based International Monetary Fund (IMF) seeking its support for what it referred to as a homegrown programme of “fiscal adjustment and structural reforms” as the cornerstone for debt restructuring.
Speculation is rife that the eight-month-old administration in St. George’s has not yet formally submitted a letter of intent to the fund for the official start of talks to garner support for the programme.