NOT FOR the first time, Finance Minister, Dr. Omar Davies, the Finance Minister, has followed his predecessors in office by using a myopic approach to fashioning and presenting the budget. By not sufficiently engaging the major players in the economy to determine the impact of his plans, the budget as finally crafted after the input from outside Parliament, represents a reactive rather than a creative intervention by the administration into the management of the economy.
We feel that Dr. Davies could have saved much of the negative fallout from his budget, particularly from business, had he consulted the major sectors to determine the impact of the policies.
This does not deny the minister the right to reject these proposals, nor would it rob him of his crucial role as the architect of the Government's economic policies. We are amazed, however, that the Government's policies on matters that affect the tourism sector, even the tourism minister appears not to have been consulted in framing the programme.
In a somewhat dramatic if not extreme reaction to the budget, hotelier John Issa has offered to turn over his hotels to the government, in exchange for responsibility for collecting the general consumption tax (GCT).
His point is a perennial one the administration of taxation is still weak despite the millions of dollars that governments have spent over the years to improve this.
Levels of compliance are low, and there is an unfair burden on those who pay, or who successfully cannot evade. There is still an accepted truth that almost half of economic activity in Jamaica takes place outside the formal economy.
Dr. Davies should end the search for alternatives to the fiscal problems, such as increased taxes, and seek palatable solutions, such as improved compliance. It does a struggling economy no good for the burden to be increased on already overtaxed citizens and businesses. He has once again not taken the steps necessary to fully and successfully bring the tax cheats and freeloaders into the tax net.
Because of these failings, GCT has been raised to 16.5 per cent, burdening all consumers and producers. This will be particularly painful for the poor, the unemployed and those of modest income.
Additionally, the hotel industry, which is the only export sector taxed on revenue, has had its GCT burden substantially increased. Some in the industry calculate that the increase will be between 35 per cent and 40 per cent. The industry's leaders point out that the burden will be particularly felt by the smaller hotels.
Rather than creative budgeting, the Finance Minister has once again taken the less productive route by milking those cows in the closest pen, while not wanting to put in the effort to reach those a bit further away.
THE OPINIONS ON THIS PAGE, EXCEPT FOR THE ABOVE, DO NOT NECESSARILY REFLECT THE VIEWS OF THE GLEANER.
