By YOURI KEMP
Tribune Business Reporter
A Cabinet minister yesterday said the Government is “open to suggestions” from the private sector on tariff cuts that could be incorporated in the upcoming 2022-2023 Budget as a means to ease the impact of surging inflation.
Senator Michael Halkitis, minister of economic affairs, described this as normal Budget planning where the Government receives numerous proposals from the business community and others. It then assesses whether these fit in with its policy priorities, and if they make sense from a fiscal perspective, by Ministry of Finance officials vetting the numbers to determine the revenue and deficit impact.
“It’s just a natural part of a budget cycle,” he explained. “We’re in the middle of preparing the Budget and so we accept submissions from individuals, or businesses, about suggestions that they would like to see in terms of adjusting rates, for example, on electric cars, scooters, all the gamut.”
The Ministry of Finance then gauges the potential impact of each potential tariff cut before determining whether it can be granted. Mr Halkitis said: “The business community, they’re constantly writing to us and suggesting things, and I know some that I’ve already received somewhere.
“Again, if the rates are too high and make them non-competitive, and defeat the purpose, they would put in a submission to defend it and ask: ‘Would you consider this?’ We sit down with our budget people and our Customs people and then we make a decision. So it’s a normal part of the budget process that we do.”
Mr Halkitis said the Government will likely have to borrow less money than projected for the 2021-2022 fiscal year, with the deficit also likely to come in below forecast. With the economy reflating, and government revenues rebounding towards levels seen pre-COVID, he added that the Davis administration will need less debt financing for 2022-2023.
“For every Budget there’s what we call a borrowing resolution, which is a borrowing authorisation which authorises the Government to borrow money for the upcoming year,” Mr Halkitis said. “So, in, 2021 a resolution was passed, authorising all of the borrowing and, as you move through the year, based on your cash flow and your needs you exhaust that borrowing resolution. We don’t think that we will use all of the authorisation.
“In fact, we think we might have to borrow less than what was originally authorised. And we make all that information available as time goes on and, at the Budget time, we’ll have a new authorisation for the upcoming year, which we expect will be significantly less than last year.”
The Government borrowed a gross $1.85bn in 2020-2021 to cover its financing shortfall. The extraordinary borrowing resulted from the COVID-19-induced shutdown.