“By contrast, the fruit of the Spirit is love, joy, peace, patience, kindness, generosity, faithfulness, gentleness, and self-control.” – Galatians 5:22-23
The purpose of government is to look after the people’s general welfare, indeed, to provide for their well-being and happiness. Specifically, government’s role may be partitioned into two components “regulatory” and “service”. Government is elected to determine policy and makes laws to regulate the governance of the country in support of this policy; and government collects taxes (direct and indirect) and obtains loans to provide a myriad of services. It may be argued that government may anchor its exchange rate at any fixed level as long as it is prepared to support it with the appropriate macroeconomic policies.
Human beings engage osteopaths to review total body health by treating and strengthening the musculoskeletal framework, which includes the joints, muscles and spine. The aim is to positively affect the body’s nervous, circulatory and lymphatic systems.
In the same way that the osteopath will structurally adjust the body, a government will be called upon to make structural adjustments to the economy which will hopefully include innovative ways of long term borrowing from the non-traditional global partner family. In other words, in the case of Barbados, the government might want to consider the 2014 United Arab Emirates (UAE) proposal, with mutually beneficial negotiated conditions, rather than the traditional IMF route with “one brush paints all countries” conditions. Given the changing global environment which impacts every country, since we are one global family, why should government, similar to the osteopath, not review its economy at regular, if not frequent, times?
This adjustment should give the government a new lease on life and should be accompanied by an aggressive export policy, since small countries cannot grow significantly on their own market footprint. This innovative policy must be grounded in diversification and high growth (“DNA of an Elephant”) private sector-led enterprise development, supported by other enterprises in the economic gearing system. It is imperative that these innovative policies must be designed to unlock private sector money supported by “Shepherding as Collateral”. Successful growth strategies will give people more money to invest which will then put economies on a sustainability growth path.
Taxation policy, without successful structural adjustment, is an exercise in futility. If a government continues to tax a static or shrinking economy it is a recipe for disaster. An important vision for taxation policy is to “tax the outputs and not the inputs”. When you increase taxes on inputs, goods and services cost more and the country becomes less competitive. The strategy must be to grow the economy and then increase the taxes on the outputs after the economy has grown. There will be an inevitable loss in taxation income when input taxes are reduced but that is why significant, creative structural adjustment strategies are paramount to address this issue. Part of this solution is reduce income taxes and increase indirect taxation.
Without a vision the people will perish.
Why is it that we have so much difficulty collecting taxes in such small economies in this information age?
Let us not pursue the acts of the flesh which will lead us down a path of decay and destruction but instead let us embrace the fruit of the spirit, which is love, and live in a world of unlimited potential. Let us as countries discover and fulfill our Divine potential.
(Dr. Basil Springer GCM is Change-Engine Consultant, Caribbean Business Enterprise Trust Inc. – CBET. His email address is email@example.com and his columns may be found at www.cbetmodel.org and www.nothingbeatsbusiness.com.)