CASTRIES, St. Lucia, April 27, CMC – Prime Minister Dr. Kenny Anthony has presented estimates of expenditure totalling EC$1.4 billion (US$514 million) as debate began on government’s fiscal spending for the 2012/13 fiscal year.
Parliamentary discussion on the budget is being held following a re-interpretation of the Standing Orders of Parliament which according to the new presiding officers restricts members to specific content under the estimates of expenditure and the appropriation bill respectively.
The current debate therefore limits contributions to the estimates. Prime Minister Anthony will present the budget address on May 8.
According to the figures presented by Prime Minister Anthony, who is also Finance Minister, the expenditure is nine per cent less than the EC$1.3 billion (US$481 million) presented last year.
Of the total budget this year EC$962.9 million (US$356.6 million) comprises recurrent expenditure while EC$494.9 million (US$183.2 million) goes to capital expenditure.
According to the Finance Minister recurrent revenue is expected to increase because of estimated collections after the introduction of Value Added Tax (VAT) which Anthony indicated will be on stream by September.
Projected revenue under VAT is EC$145 million (US$53.7 million) but opposition legislator Guy Joseph said he was unsure how this would be achieved.
The government is projecting EC$98 million (US$36.2 million) and EC$47 million (US$17.4 million) from customs duties and income tax respectively and to prepare for VAT it has budgeted EC$3.8 million (US$1.4 million) to fund office space and staffing of a VAT implementation office.
Noting that the estimates showed a deficit of EC$40.8 million (US$15.1 million) Joseph wondered whether “we have already hung our hat where our hand can’t reach.”
He said he had concerns about the success of the budget as well as the timing of the implementation of VAT.
“Which country was better as a result of VAT,” he asked adding that the government was making it appear that VAT would solve all the problems.
Recurrent expenditure is higher this fiscal year due to strategic expansion of government services and increase in cost. Wages and salaries in the public sector account for 48 per cent of recurrent revenue. This means that for every EC$1.00 (US$0.37 cents) raised by government $0.48 (US$0.17 cents) is used to pay workers.
The estimates also make a EC$7.1 million (US$2.6 million) allocation for payment of an outstanding balance of back-pay to top management personnel in the public service.