Welcome

Dennis Jones is a Jamaican-born international economist, who has lived most of the time in the UK and USA, and latterly in Guinea, west Africa. He moved back to the Caribbean in 2007. This blog contains his observations on life on this small eastern Caribbean island, as well as views on life and issues on a broader landscape, especially the Caribbean and Africa.

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Monday, December 21, 2009

Jamaica's Economic Plight: A Classic Bugger's Muddle

Jamaica's political leaders are looking down the barrel of a gun; or staring into an abyss; or stuck between a rock and hard place. Any of the analogies that suggest that they are on a hiding to nothing. Once again, solutions are being sought to the country's seemingly intractable economic problems.

The current government announced a package of tax measures on December 17 that were aimed at bringing in J$21 billion, after they take effect from January 1, openly stating that this was required to support the programme being negotiated with the IMF (see Government Information Service report). But by yesterday (December 20), PM Bruce Golding had been assailed by a barrage of criticisms and was on the verge of relenting: "I have heard the cry and the appeal of the Jamaican people...It is my intention to re-examine the existing composition of the tax package in order to determine if there are suitable alternatives." One wonders why this reconsideration is going to happen after the package was announced. Surely, only a corpse would think that the population would welcome this package and coming as it did a week before Christmas, only a stone-heart would not see that this would pierce most people like a dagger 1000 times. You do not need to be 'at the grass roots' to understand what will make people dispirited.

It's hard to be sympathetic to the politicians, who have singularly and variously presided over decades of misdirected efforts, and waste of borrowed money, that have left a country weighed down by a debt burden which everyone knows is unsustainable. Why should their cravenness get any reward? A country led by politicians who have presided over the sport of public corruption and party cronyism; where the police force has been venal for too long and too blatantly; which has a political class that has shown barely any inability to protect large swathes of its population from murdering individuals. This is not the kind of political leadership to get any support for a swingeing tax package at year end. It really does not matter what stripe the party has.

How can a nation be asked to make huge tax payments in the midst of an economic downturn that has already pushed the country further down? How can the tax burden be seen as anything but unfair when it seems to skip over those who make enormous gains from financial dealings or who are making huge profits from other activities? Where will struggling wage and salary earners get money to pay higher taxes?

The proposed protests by the opposition are nothing of a surprise, and thanks to the government for handing them that cudgel (see Gleaner). In the adversarial arena of Jamaican politics no one should start crying that this reaction was forthcoming. The country, in a crisis for decades, has never had a bipartisan approach to solving its problems so why expect it to surface now?

While the tax revenue may be needed to get support from the IMF and other international agencies, its bite needs to be one that shows that the fiscal 'effort' is going to be shared. That seems self-evidently not the case now. When you get protests from politicians, entrepreneurs, workers and others, then you need to sit up. There are easy target that were not eyed such as those who have gained from dealing in government debt. The tax base widening should not have been a plan for the future but undertaken now. By not doing that the smell of favouritism is too strong.

I would not wish the handling of Jamaica's economy on my worst enemy. But, I would also not expect a solution to come when no real stomach has been shown at the highest level for dealing with the core of the fiscal problems. Most of the economic problems facing Jamaica have their real sources right there in the Yard and 'laughing' and acting as if they could be solved by other people or in any way other than by cutting waste, using borrowed funds properly, and getting people to pay their taxes when due and fully was living in a fool's paradise. But starting to tackle the problems has to begin right, and that is not yet the case.

2 comments:

acox said...

When the people don't trust their Leaders they country would contnue to sufferand given the years of political corruption in Jamaica the people have every right not to trust them. However this leves the country between a rock and a hard place.
Trust is the dominaint force by which a nation can be guided without it the nation suffers.

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