The economic policies of Jamaica have consistently undermined the ability of the working people. It has relegated the majority of the public to a life of merely existing with the very basic necessities. This situation is made clear each time the budget is read, which is a blueprint of the public expenditures for the upcoming year.
The annual ritual of reading the Jamaican budget has always been one of great anticipation by the population. Many years ago before the present General Consumption Tax (GCT) was enacted the populace was likely to expect increases in the price of basic food items such as rice, flour, cornmeal, codfish and other everyday commodities such as kerosene oil. There was always the need to impress upon the Jamaican people the need to further tighten their belts – a way of asking for more personal sacrifices. This has been going on since the troublesome decade of the seventies and possibly before.
There is little to show for those many years of sacrifices and in fact it has only got worse for many. It is well known that growth of Jamaica’s economy has been minuscule and it performed well below that of other countries in the region such as Trinidad and Tobago and Barbados. Nothing good has become of the decades of stringent sacrifices. The country’s debt continues to grow exponentially requiring a larger percentage of the gross domestic product each year.
The latest presentation by Finance Minister Audley Shaw with expenditures of $555.7 billion Jamaican dollars (Ja$1 about US$0.01) is no different. Jamaicans, many of whom are already financially burdened are being asked to make more sacrifices in order to correct decades of economic mismanagement.
The government of Prime Minister Bruce Golding’s Jamaica Labour Party which in September 2007 inherited a massive debt from all the previous administrations is now requesting that citizens make further sacrifices by revising and increasing the list of items subject to GCT. There is also an $8.75 per litre special consumption tax imposed on fuel. Needless to say this fuel surcharge will result in price increases throughout the economy. This is in addition to non-payment of retroactive salary increases owed to many public sector workers such as teachers, nurses, police and soldiers.
Taxi operators have been told they will not be allowed to increase their fares to offset the fuel price increase.
This is a recipe for disaster and if the Golding’s anticipated civil disturbances did not materialize, it will only be a matter of time before the restive forces become unleashed.
While one cannot blame the present administration for trying to meet the budget shortfall it is merely a continuation of the economic hardship with which Jamaicans have been shackled for many years. There appears to be no relief in sight and no new ideas except to raise taxes or secure more loans. Neither option is good in the present global economic climate.
The Jamaican business class is also faced with an impossible competitive economic stage due to an inhospitable business environment inclusive if excessively high interest rates, low skilled labor and extraordinary security concerns. All these costs will eventually be passed on the consumers. Contributing to the economic decline is this inordinate public debt burden which consumes every cent the country earns, and the inability of successive administrations to make the precise policy decisions and national investments. A grinding bureaucracy that discourages compliance and facilitates corruption continues to be a major hindrance to attracting new businesses. This results in the economy being extremely vulnerable to external events.
Leadership on economic and other issues is clearly missing. The policies of today are nothing new as they are the rehash of previous governments. It is clear that the government has one card left: the International Monetary Fund, again the financier of previous administrations. The solution cannot be found in more loans or milking the poor for more taxes.
It is said that only three per cent of the population pay 80 per cent of the country’s taxes, suggesting that there is massive evasion and avoidance by individuals and businesses and compliance is an issue with which the government will have to deal more effectively. If this is so it brings into question both the wisdom of increasing taxes on the few as well as the motive of the many who threaten the already fragile physical infrastructure through protests that destroy roadways.
It is clear that the Jamaican government is in a very difficult situation and that the economy requires a major restructuring. However it is more troubling that even with all the sacrifices that citizens are forced to make, the government continues to fail in providing the basic services. The security and justice system continues to deteriorate with no time line for real improvements. One would expect that decades of sacrifice by the Jamaican people would yield some benefits. Unfortunately they are being asked to forfeit even more with no clear future benefits. Clearly the people have little choice. Most will continue to make do with the little they have to make sure their children receive an education, have sufficient food and clothing. No doubt they will continue to be innovative and resilient notwithstanding the harsh economic conditions which those elected to govern seen incompetent to correct.