As the government gets ready to present the 2012 National Budget to the people tomorrow, people are now waiting to find out how they will be affected through the prices of goods and services and delivery of government services.
The main revenue for the government in the National Budget is through taxes and it is always a balancing act for any government to ensure that it rakes in the much needed revenue but at the same time think of the plight of the people.
Targeted assistance for the less fortunate is also something people look forward to.
In the 2011 National Budget, VAT was increased from 12.5 percent to 15 percent on many items except some essential items.
The government had anticipated that it would rake in about $532M in VAT this year surpassing anticipated receipts for last year by $103M.
This major increase in income from VAT was attributed mainly to the increase in the VAT rate on goods and services.
Direct taxes that people paid this year to the government were expected to rake in $454.5M, which is $19M more compared to 2010.
Direct taxes are income taxes comprising of personal or PAYE taxes, corporate taxes, dividend taxes, capital gains taxes and other minor taxes.
An important point to note is that people who earn $15,000 or less do not pay personal income tax as the government raised the income tax threshold from $9,000 to $15,000.
The total revenue for government this year was estimated at $1.745B while the total expenditure stood at $1.96B.
It will be revealed tomorrow on what areas the government will concentrate on to generate more revenue and what areas it will focus on when spending the tax dollars.
Targeted business or growth incentives, infrastructure development or upgrading are also important in the budget as this generates investments which then generate more income and jobs for the people.
An important point to remember is that if the overall expenditure increases in a National Budget, it will also mean that the government has to generate more revenue through taxes that people pay.
The other option for the government to sustain increased expenditure levels is to borrow more money.
According to the 2011 National Budget, government's total debt stock was $3.1B in 2009, compared with $2.9B for 2008.
The 2010 debt stock of both domestic and external debt was estimated at $3.4B.
A total of $518M was allocated for debt repayments this year.
The 2012 National Budget will be announced tomorrow morning.
Story by: Vijay Narayan
