Ronald Ramkissoon

The process of family budgeting bears some resemblance to that of the national budget exercise.

If, in the home, you were responsible for making the family’s budget in the coming year, then you would have to consider several issues including likely income, expenditures, whether you would need to borrow, how much you should save and so on.

On the income side you would factor in whether or not a salary increase is likely or whether another member of your family is about to start working.

On the expenditure side, you would consider how much you intend to spend on health, on education for children, extension of the house, a new car maybe.

 Having completed income and expenditure estimates you would be left with either a surplus or deficit. In the case of a deficit, you may have to borrow from the bank, family, or draw down from your savings to meet any shortfall. A surplus position is a happy position to be in, as it shows that you are likely to increase your savings and that you are managing the family budget well.

The 2007/08 National Budget has been presented, debated and passed in Parliament. It is for the population now to consider how best it can make use of any favourable measures and minimise the negative effects of any adverse ones.

The 2007/08 Budget shows expenditures of $40,381.2 million and revenues of $40,292.0 million and a surplus of $89.2 million. The largest source of revenue is the non-oil sector, which is expected to bring $18.6 billion into the Government coffers in the coming fiscal year.

The energy sector on its own is expected to bring in $15.4 billion. The largest expenditure item is education and training which will receive $7.6 billion.

Among expenditure items that are of direct benefit to citizens are increases in NIS benefits; Senior Citizens, Disability and Public Assistance Grants.

There is also a $1.00 increase in the Minimum Wage to $10.00 per hour and a 15 percent increase in the wages of employees in the URP and CEPEP.

However, if the rate of price increase does not slow from the current 8.0 percent then these benefits would not be as meaningful as they can be in helping those in the lower income groups, especially with their food bill. At this time, a target of 6.0 percent does not seem achievable next year.

Apart from these specific measures, the Budget Speech also announced at least one measure that can increase savings through the increase in the tax allowance on pensions and annuities to $25,000 from $12,000. Savings must play an important role in both family and national budgets and consequently, higher incomes for individuals should mean higher savings.

Government spending and actions in general have a big impact on the economy of Trinidad and Tobago. Accordingly, in order to stimulate greater output and employment in certain sectors of the economy, the Budget announced expenditure initiatives in agriculture, manufacturing and tourism.

If the measures to encourage growth in these sectors are implemented then greater output can result and more persons are likely to be employed in these sectors of the economy.

The actual impact of these measures will, however, depend importantly on how effectively they are implemented. Unfortunately, there tends to be a large gap between budget announcements and actual output or delivery. The current Budget is not likely to be an exception.

Decisions about expenditure and revenues are not only about generating output and ensuring a sound macro-economy but are also about the improvement in the standard of living of people.

Accordingly, a national budget usually includes measures to improve conditions in health, education, housing, security and utilities. This year’s Budget has paid attention to these areas.

However, very often Budget Speeches simply repeat certain measures announced in previous Budgets, without properly accounting for past plans or expenditures or insisting that Budget measures are implemented. These long-standing issues need to be addressed.

While the Government, in its Budget Speech has expressed its intention for the coming fiscal year, each citizen and business should formulate their own financial intentions for the coming year. These plans must of necessity consider the Budget measures wherever necessary.

Questions to consider include how much of any increased income should be saved. What particular Budget measures hold good prospects for me or for my business and how do I make good use of same? Can a particular measure hurt my business or me and how should I minimise such impact?

We are encouraged to consider the ways in which measures in this Budget can bring about a better life and greater prosperity for us. Happy budgeting to all!