D.K. Duncan THE CORRECTION has come - $13.8 billion Jamaican dollars worth of it. Every single Jamaican is being asked to make a contribution to correct the negative results of the Finance Minister's action or inaction during the election year.
In the April 2002 budget presentation, the Minister of Finance promised no new taxes. By December 2002 he tabled the first supplementary estimates showing an over-spending of J$13.4 billion. At that time he announced new revenue measures to collect J$l.l billion beginning on January 1, 2003.
'NOW THAT WE REACH'
By February 9, 2003, the Minister was telling the party faithful - "so Comrades, the question we face now - NOW THAT WE REACH, WE HAVE TO CORRECT IT." The public was told on Thursday April 17 that part of the cost of that correction is a further increase of J13.8 billion in new taxes - almost the same figure put forward in the December 2002 supplementary estimates, as unbudgeted spending. Spending which led to a 75 per cent increase in the target for the budget deficit.
'WE HAVE TO CORRECT IT'
Another part of the cost of the correction was the downgrading of Jamaica's status by the rating agency - Standard and Poors. This has been followed by a greater focus on our public debt ratio, fiscal deficit (overspending) and now our primary balance by several other players in the International Private Capital Market.
This focus resulted in four months of great uncertainty accompanied by a significant increase in the public debt ratio and a rapid devaluation of the dollar.
From all accounts, many feel that Thursday's history-making increase in taxes by the Minister has a great chance of being collected. It is therefore credible. This, it is suggested, will placate the rating agencies.
TRANSPARENCY
The Minister himself repeated the same concerns he put forward in last year's budget. Concerns which he and the administration did not address during the course of the Election Year. This time he elaborated further "-the credibility of the budget rests partially on being able to produce a financial programme which satisfies our creditors and at the same time provide the ordinary citizen of this country clear reasons for hope for a better life." Minister Davies may have succeeded in the former but falls exceedingly short with the latter.
A budget which cannot publicly anticipate a figure for a growth rate demonstrates a significant lack of transparency and self-confidence. A budget which depends on the major increase in additional revenue coming from the broadening of the base of tax on consumption without providing specifics may be considered clever but is really contemptuous. Inspiring "hope for a better life" does not reside in the withholding of information - for whatever reason.
On the question of the G.C.T., the Price Waterhouse Coopers analysis of the budget makes the point that "the impact on certain critical sectors, for example, exporters, farmers and health providers will need to be evaluated." Shouldn't this evaluation be done before the announcement or is it as a result of the overriding need to immediately satisfy the rating agencies?
EQUITY
The Minister himself noted that "the credibility of the country rests on our demonstration of social stability." The absence of social stability rests to a large extent on transparency and equity. When the cost for health care of Jamaicans (including drugs) is increased by 15% or more in order to facilitate the Minister's correction, social stability is at risk. This is especially so when there is an absence of evidence of shared sacrifices between those who correct and the rest of us who pay for the corrections.
PARTICIPATION
How do we avoid a repetition of the events which led to the need for correction? Civil Society needs to become more active. Independent Think Tanks, Lobby and Pressure groups can assist in monitoring the short and medium term economic programmes proposed by the administration.
A number of pre-Budget activities had been proposed by the Moses Committee following the Gas Riots of 1999. They recommended that it no longer be possible for taxes (or any other measure affecting the lives of the people) to be imposed without prior debate and approval of the Legislature. To give effect to this the Moses Committee recommended that "in future pre-Budget consultations be held with different sectors of the people, through the media and in face-to-face meetings in which government would outline the broad options it may be considering with respect to revenue and expenditure measures." Did consultations take place this time around?
In addition to the above, Balford Henry in The Sunday Gleaner elaborates on many other measures proposed to encourage participation and provide transparency. Henry points out that most of these recommendations and agreements have been laid to rest.
It is an opportune time for Civil Society to revisit some of these proposals. Let those who pay for the corrections participate in the way the corrections are carried out. One Love, One Heart.
A dental surgeon, Dr. D.K. Duncan is a former General Secretary and Minister of Government in the PNP Administration of the 1970's.
