Its National Budget day and today, you will find out about the interim government's financial plan for next year and where the tax dollars will be allocated to provide services to the people.
A lot has been said by a number of ministries, unions, business houses, NGOs and the ordinary people about what they want in the budget but the fact remains that the interim government needs to come out with a responsible and tough budget.
It will definitely be a balancing act where the interim Finance Minister Commodore Frank Bainimarama will try to allocate funds to areas like Education (which usually gets the biggest budget allocation), Health, Rural Development, Housing and Infrastructure.
The question is whether he can increase allocations significantly based on the limited revenue or will the interim government take the direction of increasing their borrowing to ensure that more funds go towards capital projects.
In an interview with Fijivillage, the Dean of the Faculty of Commerce at the Fiji Institute of Technology Doctor Mahendra Reddy said while a number of people are just asking for increased allocations and reduction of prices of goods, the budget should focus on projects, mainly infrastructure development.
The pressure is on the interim government with a threat of industrial action from the public sector unions if the 8 percent COLA and the pay restoration are not back-dated.
But here is the fact Doctor Reddy said the civil service expenditure needs to be controlled.
And if we do not then we will only have 18% or less of the National Budget going towards capital projects.
Doctor Reddy said we also need to look at our industries.
Tourism is expected to become the main driver of economy, as we are an attractive destination and due to the global financial crisis people may see Fiji as a cheap destination. But to make that happen the interim government needs to ensure increased taxes are not implemented in the Tourism and Hotel sector which could see us becoming a less attractive destination in terms of costs.
The Sugar industry, the reality is that the EU preferential prices are decreasing, cane production and sugar output is low and cane farming leases are expiring. The sugar income is decreasing and Doctor Reddy said tough decisions need to be made.
According to the latest accrual trade data released by the Reserve Bank of Fiji, in the first eight months of 2008, the trade deficit has widened by approximately 231 million dollars to 1.3 billion dollars.
The RBF said the out turn reflected growth in imports driven by intermediate and consumption goods which more than offset the rise in merchandise exports. So we need to drive our Import Bill down and focus on increasing our foreign exchange by increasing exports.
One way to reduce the Import Bill is to raise duties on imported items to ensure that people start switching to Fiji made products.
This will assist the local industries and reduce the trade deficit but then again it will be a balancing act on where prices will be reduced, knowing that for an ordinary household a number of imported items are in their grocery bags when they leave the supermarkets on shopping day.
The income tax threshold was increased to 15,000 dollars earlier this year this means that anyone who earns 15,000 dollars or less does not pay any Income Tax or PAYE.
This has also given them more purchasing power and is a positive for them due to the rise in the price of many items.
