In Guyana, there is a growing frustration among taxpayers who don’t know what they are getting in return for the taxes they pay. Citizens want to know how effectively and efficiently the government is using their money to deliver needed services. They want to know how their money is being spent, why it’s being spent that way, and what outcomes their investment yields. Most taxpayers would be hard pressed to answer these questions. This analysis seeks to answer these questions, broadly, by taking a macroeconomic look at what taxpayers received in return for their money over the last five years.
Between 2014 and 2018, taxpayers funded more than $1.1 trillion in government spending. This amount was about three times the value of the country’s real economy of $407 billion at the end of 2017.
However, an analysis of the return on public investment as measured by economic growth, job creation, access to quality and affordable healthcare, poverty reduction, and public safety shows that taxpayers received successively less in return for their tax dollars.
Economic growth almost halved, thousands of workers lost their jobs, access to and the quality of critical services deteriorated and public safety weakened over the period. Evidently, the government was unable to use taxpayers money and deliver a good return – higher economic growth, improved quality of life, and more opportunities for long-term prosperity. Its budget and policies undermined growth and began to reverse decades of positive economic momentum and social and economic progress. Despite the poor performance, taxpayers are on the hook for hundreds of billions of dollars in debt.
When the economy performs poorly and access to critical public services decreases and jobs disappear, there are devastating social and economic consequences. Families, especially those living on tight budgets are forced to make even harder choices like choosing between putting food on the table and sending their children to school. At the level of communities, problems such as homelessness, crime, hunger, family separation, adult and child poverty, racial tension and violence tend to rise. Early evidence suggests that these problems have already reached alarming levels resulting in heightened public concerns for safety and security.
It is no surprise that taxpayers are growing weary, having little trust or confidence in how the government spends their money. In fact, the evidence confirms that the growing public frustration and demand for greater transparency and accountability are well-founded and likely necessary to improve public budgeting and performance.
Public investment is inseparable from economic prosperity – productivity growth, job creation, higher incomes and economic growth. However, these outcomes are not guaranteed merely by writing bigger budgets and spending more public monies. The government must be intentional and deliberate about achieving the best outcomes for taxpayers’ money.
The best approach to achieve public transparency, accountability, and a good return on investment is to focus on what citizens really need. Accordingly, lawmakers must start making public investment decisions that are informed by research, data analytics, and strategic planning and show a demonstrable likelihood of significant economic impact. Moreover, the focus should be on accountability in results and performance, broadly defined, and on the development of budgets that fund outcomes, rather than inputs.
Dhanraj Singh is an Economist and the Founder and Executive Director of the Guyana Budget & Policy Institute.
Singh, Dhanraj (2018). Public Budgeting and Performance Need Urgent Improvement. Taxpayers Pay More to Get Less. Guyana Budget Policy Institute. Policy Report. July 2018.
Guyana Budget, Public Policy, Transparency, Public Accountability, Return on Investment, Public Finance, Taxation, Governance, Open Budgeting.