Budget director, Dr Ashni Singh yesterday conceded that the measures in the 2002 national budget to stimulate growth and aid businesses in distress were inadequate but argued that what the budget contains is what can be afforded at this point in time.

Sharing Finance Minister, Saisnarine Kowlessar's, post-budget media briefing yesterday, Singh said that a lot more work has to be done and the government is committed to doing so but the issues have to be put into perspective.

Quizzed on when what needed to be done would be done to put the economy in good stead, Singh said that adequacy was an elusive creature. He said while there was a number of things the government would like to do to stimulate the economy and aid industries in distress at a faster rate, this desire has to be put in perspective. He cited the difficult year just past and the previous year, as well as disruptions on the international scene.

However, he was confident that as the situation stabilised and the regulatory agenda of the government was put in place, all the issues would come together and allow for a more efficient allocation of resources. Then, he said, the government would have achieved some state of adequacy in terms of budget measures.

On the question of continuing promises of a comprehensive tax reform and the non-increase in the non-taxable income threshold this year, Kowlessar told reporters that a consultant has been hired to conduct a detailed study of the tax system and to recommend changes by the end of this year or early next year.

He said that because of the work to be done by this consultant, the government did not address the non-taxable income-tax threshold. Asked whether this meant that if the report was not out by the next budget the issue of the non-taxable income threshold would not be addressed and why it has taken the government so long to deal with the issue of comprehensive tax reform, Kowlessar's adviser on the budget, Winston Jordan, responded.

Jordan said that the 1994 white paper on tax reform dealt with short-term solutions to fix the tax system and most of the initiatives in that paper were implemented. He said because time has evolved and one could not tinker with a tax system in a major way each year, the government has now approached the issue of comprehensive tax reform. He said he did not feel that a long period had elapsed, as 1997 was when the last efforts at short-term remedies to the system were instituted.

The budget adviser said that a timetable was in place for the study on comprehensive tax reform and the report was to be handed in this year. He said the government had committed itself to start implementation of those reform measures in 2003.

Kowlessar also referred to the establishment of the Guyana Revenue Authority to streamline tax collection.

Currently pay as you earn taxes represent 20 per cent of revenue intake and corporation taxes 19 per cent. This is the second year that PAYE taxes have overtaken corporation taxes. It is also the second year that the minimum wage has overtaken the non-taxable income threshold of $18,000 monthly.

Fifty per cent of the US$355 million budget is being funded from external sources, Jordan told reporters and $1 billion has been set aside for increases in wages and salaries and other expenses.

As to the Youth Employment Programme announced previously by the budget, Kowlessar said the mechanisms of this programme were still being worked out and the details would be pronounced on some time later this year. The budget has so far been criticised as unimaginative and not rising to the challenge facing the economy.