![\"\"](\"http:\/\/dominicanewsonline.com\/news\/wp-content\/uploads\/2011\/07\/commentary2.jpg\" "\\"commentary\\"")
The burden of taxation to repay the massive loan of $27-million used to construct the state house will rest almost entirely on the shoulders of our youth. The investment in a State House in Dominica falls under the category of government capital expenditure which is a subset of the larger concept of government fiscal policies.<\/p>\n
There are two categories of action that a government can take in pursuing its fiscal policy. The first is the taxation channel and the second is the government expenditure channel. The objective of any additional government expenditure from an economic perspective is always to reduce the level of unemployment.<\/p>\n
The thinking is that by creating capital expenditure projects, our nationals will gain employment in the construction sector. This in the short run will jolt the economy as consumption will increase. As people gain wages and salaries from these projects they will purchase more from the producers giving rise to increase demand for goods and service in the country.<\/p>\n
This will eventually decrease the overall national unemployment rate. When the unemployment rate reduces it is expected that the government revenue will increase as more income and sales taxes will be paid into the government treasury. The next stream of economic benefits evolves from the multiplier effect. The concept of the multiplier effect states that the circulation of $27,000,000 in the economy will eventually lead to a greater cash flow in the overall economy. This will advance the investment climate generating further employment. This will improve the general welfare of the people. This is a conducive and simple illustration of how fiscal policy dynamics work in the context of this article.<\/p>\n
Let us first start out by looking at the background of the state house project.
\n–\u00a0\u00a0 \u00a0It is a government loan of $27,000,000.00 from the Chinese.
\n–\u00a0\u00a0 \u00a0Our nationals are not employed in the construction of the project.
\n–\u00a0\u00a0 \u00a0The State House will be a tourism attraction by government admission.
\n–\u00a0\u00a0 \u00a0This project was not debated in Parliament. It is a one man decision.<\/p>\n
My two pence knowledge indicates that something is fundamentally wrong with this project.<\/p>\n
Firstly, the present scenario is at odds with all established economic principles. We (Dominicans) will be left with a loan that we will have to pay back with interest. Clearly we (Dominicans) did not benefit from the construction of the project since locals are not employed. This is defeating the objective of capital expenditure as a fiscal policy. Dominicans would not have benefitted from the multiplier effect since all the money would have gone back to China through the channel of the constructors and not circulated in the local economy.<\/p>\n
The burden of this economic blunder by the government will rest solely on the shoulders of the youth of this country. One may ask, how so?<\/p>\n
The explanation is simple. The loan payment will come from the taxes that we will eventually have to pay. By the time the loan matures it will be the youth of today, those who will be lucky enough to have a job that will bear the burden of taxation. Over time, by all predictions, the tax rate will be much higher than at present.
\nThe altruism argument to justify the taxation burden on the youth is futile from all perspectives and should not be attempted.<\/p>\n
My question to my fellow young people of my country is this: Is it fair to us to bear the burden of a $27-million loan that our fellow Dominican brothers and sisters had not benefit from? Will you stand by and watch this economic catastrophe unfold and do nothing?<\/p>\n
Secondly, the established dogma of rural development is to exhaust the use of existing resources before expenditure is extended in new ventures. Frankly we have not exhausted the space available to us in the existing physical infrastructure. The explanation provided by government to construct the state house was not convincing. It blatantly lacked conviction. In my opinion it is a fallacy. There is nothing of cultural significance in the construction of a state house. The financial viability of this project is simply not realistic. It does not support the expenditure of the vast amount of money. It is also not a priority in the context of national development. It is not sustainable by all necessary measures.<\/p>\n
So many questions come to mind regarding the conceptualization of the state house. Many of my peers \u2018floated\u2019 these questions:
\n1.\u00a0\u00a0 \u00a0Could it be Mr. Skerrit\u2019s idea to use the 18-3 majority in parliament to become president for life by a constitutional change?
\n2.\u00a0\u00a0 \u00a0Could it be a payback to a Chinese firm for campaign funding?
\n3.\u00a0\u00a0 \u00a0Could it be another kickback scheme by this already tainted government?<\/p>\n
Whatever is the reason, it is clearly not a project that can be voted as a priority to national development. Nor is it a measure to reduce unemployment.<\/p>\n
More importantly, the tax burden it rests on the shoulders of our youth is not justified. As a youth of this country, I am personally putting on the record my dissatisfaction with this massive financial undertaking by government. I have little faith in the profitability of the state house as tourism product in a currently declining industry.<\/p>\n
So, I appeal to other Dominican youths to take a closer look at the events transpiring in our country, sooner or later the responsibilities of the country will be laid at our feet. As leaders of tomorrow, it is imperative to rise to the occasion today. We should not leave the calculated errors of this government go unnoticed.<\/p>\n
Opinions expressed in this article do not necessarily reflect those of Dominica News Online.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"The burden of taxation to repay the massive loan of $27-million used to construct the state house will rest almost entirely on the shoulders of our youth. The investment in a State House in Dominica falls under the category of…","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_cbd_carousel_blocks":"[]","footnotes":""},"categories":[13],"tags":[],"class_list":["post-49405","post","type-post","status-publish","format-standard","hentry","category-commentary"],"acf":[],"yoast_head":"\n