Bamba Laye:

As usual, good write-up below! Needless to say, I look forward to reading
your take on the latest Budget Speech.

God willing, I'll give my take on the 2003 Budget Speech at the weekend.

Jabou: I wish you speedy recovery. I hope you Doctor has prescribed enough
anti-biotics for you.


Ebrima Ceesay





>From: BambaLaye <[log in to unmask]>
>Reply-To: The Gambia and related-issues mailing list
><[log in to unmask]>
>To: [log in to unmask]
>Subject: Famara Jatta's Prescription for Catastrophe
>Date: Wed, 18 Dec 2002 08:09:13 -0500
>
>Since you'd have to hail from the Darth Vader School of Economic Policy
>to want to hike taxes when the economy is hurting, the real aim of
>Famara Jatta's 'prescription for catastrophe,' is to appease the codicils
>of
>the Kanialai Emperor's looting and booting scheme.
>
>The basic lessons of tax policies are as old as Adam Smith - in most
>every instance, the more a good or service is taxed, the less of it is
>supplied and demanded. So if Fams is trying to raise more revenue
>through higher taxes without incentives for increase in income, chances
>are there will be lower consumption. An increase in sales taxes will lead
>to fewer sales, and an increase in taxes on businesses will lead to fewer
>businesses to employ workers. Translation? Deeper economic trouble.
>
>Tax hikes can do damage to an economy at a vulnerable moment like
>ours. While there may be some success in closing the budget deficits
>through a variety of tax increases, the victory will be pyrrhic. The
>economic evidence is very clear that these tax increases will hurt the
>economy, lower incomes, and slow business creation as economic activity
>will tend to move to low-tax locations. This is obviously a high price to
>pay to avoid making tough choices on government policy of state
>spending or should I say Emperor Jammeh's impulsive spending policy,
>for lack of a better expression.
>
>Some economic think tanks have identified several possible approaches
>to alleviate and ultimately resolve a deficit problem. Some prominent
>economists, like Milton Friedman, object to tax hikes as a means to
>reducing budget deficits and advocate, instead, tax cuts to achieve that
>objective. Others, for example, Robert Barro, reject these tax-oriented
>solutions and argue that a better strategy lies in spending cuts, provided
>there exists a concrete spending policy. These opposing postures are of
>course based on the presumption that the two components of the
>government budget – tax hikes and spending cuts - are interrelated.
>
>Fams' contention seem to be with those who argue the opposite that
>government spending and taxation are independent of each other. They
>believe that any tax hike can reduce the deficit because spending will
>remain constant in the process. Clearly, policy implications and the
>proper strategy to resolve the deficit predicament – which Fams' seem to
>have ignored in his projections – should be sensitive to the particular
>relation between government spending and taxation. Just imagine how
>many second-hand generators or tractors Yahya would want to buy out
>of the blue knowing that government revenues have doubled in three
>months. Not to talk about the brown bag exchanges that goes on behind
>closed doors/under the table. Such negligent disregard of strategic
>planning is what we have to deal with. Simply inept!
>
>Folks, the shit is coming down the hill and guess who's at the bottom of
>the hill.
>
>-BambaLye


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