Chamber response to Budget measures
The Chamber and its members are relieved that the government is keeping to its manifesto commitment of not increasing the costs of water or electricity. The Chamber also welcomes the fact that there has been no increase in social insurance costs for employers.
The Chamber has made a number of representations to the government directly and through various advisory boards where the Chamber is represented in relation to rates. On the whole, these recommendations were aimed at giving many in the retail and wholesale sector some relief after the drop off in trade as a result of fewer tourists coming to Gibraltar. The reality is that these businesses have no option to trade elsewhere. Their costs continue to increase and with the drop in sales from fewer customers, coupled with the relentless pressure from online sales, the future for large swathes of Gibraltar’s retail and wholesale sector looks bleak. At a macro level Gibraltar’s economy may be excelling but the retail and wholesale sector which employs over 4,500 people continues to suffer. Whilst the measures in relation to rates announced at the budget are welcome, the Chamber has engaged with Government and made further representations on behalf of the retail and wholesale sectors following the budget.
Many of the business related measures announced in the budget whilst welcome are not game changers from a business point of view. In this respect it would be instructive to understand the policy behind the reductions in import duties for some items but not others as well as to why there is a two tier import duty system for some goods and not others.
It would appear that the government is managing capital projects prudently but a recurring theme as with the previous administration is the ever increasing cost of paying for a growing public sector as well as continued above-inflationary pay rises. It is the private sector in the main which has to fund the above inflation pay rises. The Chamber questions whether there is there really a need to give above inflation pay rises given the other benefits the public sector enjoys such as non-contributory pensions, year round family friendly hours and in many departments retirement at 55.
Last year we commented on above inflationary increases in government’s recurrent expenditure. The Chamber believes that surpluses which turn out to be bigger (or much bigger) than forecast should be invested productively and not used as an excuse to increase recurrent spending further.
A call for reliable economic indicators
Governments of all political hues have always trumpeted their economic prowess. In reality though, it is the private sector which generates most jobs and pays most taxes to the government. It is therefore incumbent upon any government to manage its finances prudently for the benefit of all.
The brickbats exchanged between the government and the opposition about who spent what and when does little to inform the real political debate. What would be useful for the citizen for the business person and for the investor to have is some commonly agreed robust economic indicators which are measured and published on a regular basis. We would like to work with government and opposition to agree on a series of such indicators. Then everyone would be able to see how Gibraltar’s economy is performing from one year to the next.