A couple of days ago, our Vice President invited the public to comment on and make suggestions for his upcoming Budget Speech. In an act of citizenship, I also want to offer one or two ideas that the budget should address. So, for whatever it is worth, I offer my thoughts.
The key thing the budget obviously needs to address is revenue and spending. I think the VP or the nation at large needs to make prudent decisions about where the money should go. What should we spend our money on? And here again, I think there should be a broad consensus that we should spend money only on activities or projects that generate positive returns.
And which are those projects? Just to name a few, they would be education and health. I’m struck by the number of people who do not have access to good health care. I was surprised to learn of someone who had to drive all the way from Mogoditshane to Ramotswa to see a dentist.
If ordinary people do not have access to good health care, it has a negative impact. It has a bearing on the ability of people to be productive. It leads to absence from work, which, again, undermines productivity.
Good health care does not always have to be provided by the government. So the government does not have to provide the service directly. This helps the government collaborate with other parties and avoid thinking that it should be doing this directly. It is also true that non-government operators are more efficient than the government.
So, the minister should spend money wisely by partnering with existing private hospitals in the case of education to improve health standards. We should also extend support to mission hospitals, for instance, that we have across the country, while allowing them to maintain their independence.
Well, I’ve spoken about what the VP, who is also the Finance Minister, must do. Let me then turn to what he should not do. He should not make Botswana a high-tax nation anchored on a huge public sector. We are already experiencing an economic slowdown, and we cannot tax our way out of it. The feasible way to grow is to reduce spending, lower our taxes, and allow people to keep as much of their own money as possible in their pockets.
Last year, Nima Sanandaji and Stefan Fölster published a book titled The Welfare State Myth. The book makes for interesting reading, and I recommend it to the VP since he comes across as an avid reader. The book goes against conventional wisdom insofar as the welfare state is concerned. We know that many believe that the state needs not only to be big but must tax people heavily and aggressively in order to provide support to the population. However, Sanandaji and Fölster draw on data to show that ‘it is possible to achieve positive social outcomes without a large state, and that a large state does not guarantee positive social outcomes.’ They cite Singapore and South Korea as examples of countries whose tax burden is not heavy but provides adequate social support.
They also show that the ‘level of unemployment, especially among the less educated, is systematically higher among countries with a higher tax rate. This indicates that generous welfare systems create a poverty trap, characterised by dependency on benefits and high thresholds into the labour market.’
So I urge the VP to note that it is possible to provide social support without ballooning the state and burdening us with more taxes.