By Dr. Basil Wilson
In a country where there is serious intellectual discourse, one would expect that the Parliamentary debate would lead to a public debate concerning the policy agenda put forward by Prime Minister Holness and the Finance Minister, Audley Shaw. There was a response from outgoing Leader of the Opposition, Portia Simpson Miller, and the former Minister of Finance of the PNP and the incoming Party leader, Dr. Peter Phillips. Democracy requires civic engagement at home and in the diaspora.
The chronic fiscal borrowing to finance annual expenditures has finally come to a screeching halt. The International Monetary Fund (IMF) agreement that Jamaica signed in 2011 when the PNP returned to power, placed the fiscal situation in a straight jacket and that fiscal discipline subsequently led not only to a balanced budget but there was the agreement that a primary surplus approximately 7 percent of GDP would be used to pay down the staggering public Dept debt.
The Andrew Holness administration is no longer bound by the IMF agreement, but the Holness government clearly recognizes that the adherence to fiscal discipline, balancing the budget, generating the primary surplus and paying down the accumulated debt is indispensable to achieving meaningful economic growth in Jamaica.
The accumulated debt had at one stage sky-rocketed to 145 percent of Gross Domestic Product. Through the adoption of fiscal discipline that cuts across Party lines, the burdensome debt has been reduced. At the end of the Budget Year 2017/2018, the Public Debt will drop to 108.6 percent of GDP. The projection is to reduce the Public Debt to 60 percent of GDP in the ensuing years.
Such a pay down of debt is not an abstraction. The crushing Public Debt depriving the society of sorely needed funds that could be used for health, education and spending on infrastructure.
The Finance Minister points out that the country for the last couple of years has been experiencing low inflation, yet bank loans to entrepreneurs remain peculiarly low and interest rates high. In comparison to other middle income countries, the percentage of bank loans stimulating economic growth remains quite meager.
Both the Minister of Finance and the Prime Minister make the case for the shift in income taxes to more broad based indirect taxes. This argument is used to rationalize the elimination of income taxes for those earning one million Jamaica dollars or less that took effect in the previous fiscal year and the additional J$1.5 million earners that will take effect sometime in this 2017/2018 fiscal year.
There are 1.3 million Jamaicans who are in the workforce but only 500,000 were enhancing the revenue coffers. To make up that loss in revenue, the Holness government has had to impose a regressive form of taxation to raise an additional $13.5 billion to close the hole in the 2017/2018 Budget.
The tax policy raises a certain fundamental/philosophical question on the subject of governance. Although I don’t know of any recent studies of the state of wealth and income inequality in Jamaica, I would surmise that wealth distribution is far from what exists in the Scandinavian countries but would be more similar to countries like Brazil and the United States where income inequality is stark.
Fiscal discipline should entail the adoption of a progressive income tax to ensure that those who are enjoying prosperity are also contributing to their civic obligations to build a society dedicated to social justice. Regressive taxation fosters a society oblivious to social injustice. In essence, such public policy exacerbates the current level of disorder that has become characteristic of contemporary Jamaica.
In his Budget address to Parliament, Prime Minister Holness spent a great deal of time not just on fiscal issues but in examining the unproductive lifestyle that causes a disproportionate rate of deaths in non-communicable diseases such as deaths by strokes, cardiovascular diseases, diabetes, cirrhosis of the liver, etc. Much of these ailments are caused by a sedentary lifestyle, smoking and excessive drinking.
The Prime Minister examines the propensity in the society vis-à-vis violence. It is not just gun violence, but the sub-culture of violence that typifies everyday life in the larger society. The violence can be measured by the amount of wounded patients who clog emergency rooms suffering from stabbings, blows from blunt objects and assaults from domestic violence. One third of cases registered at emergency rooms are the result of this cultural propensity for violence.
The Prime Minister is aware of the link between the culture of violence and the proliferation of crime. Andrew Holness makes reference to a study published by the United Nations Drugs and Crime entity in 2013. The study analytically differentiated the countries where crime rates are falling and those countries which are being overrun by crime. Criminologists are cognizant that where there is rampant law enforcement corruption, an ineffective judicial system and an absence of social capital, crime will be prevalent.
The Prime Minister is aware of the limited long term impact of sole dependence on the coercive apparatus of the state to control social order. Although the Prime Minister is not unsupportive to hard policing, he recognizes that finding ways to absorb and include unattached youth in job training, apprenticeship programs and national youth service is critical to dealing with the violent crime epidemic.
The Prime Minister recommends sweeping changes to include unattached youths estimated at 130,000 of the population. Many of the recommendations require more careful analysis that can be done at the tail-end of a newspaper column. But there are two areas that require systematic attention – the rise of “banduloism” as a prevalent norm in the society and the equally difficult task of dealing with wealth and income inequality. The Prime Minister’s Budget Speech which went beyond budgetary matters, raising life and death issues just as important as the decline of the Public Debt. There is the saying that the unexamined life is not worth living. Prime Minister Holness has examined Jamaican life and made recommendations for solutions. It is the role of civil society to engage ourselves in this larger discourse.