IN INFORMING the country of how the budget will be financed, Dr Omar Davies, the finance minister, has a task that is not to be envied. We would urge him not to take the easy and damaging approach.
There is something to build on. Although expansion has been much less than can be materially meaningful to most Jamaicans, the truculence in the economy is easing. The Statistical Institute of Jamaica reports that the country's production of goods and services in 2005 grew by 1.5 per cent.
Although inflation last year would have robbed Jamaicans of real benefits from this expansion, it is the sort of notional indicator that suggests that policies to encourage economic expansion are needed, and can work.
Of the many dilemmas faced by Dr. Davies, four appear to be basic. The first is to contain the threat from inflation. High oil prices will make this difficult. This could also be affected by the conclusions of the current negotiations between the Government and organised labour on the cap on public sector salaries.
The second is the management of the fiscal deficit. Dr Davies is impatient to achieve a balanced budget. We maintain that it is a laudable target that, if achieved, significantly will ease much of the pressure on the fiscal accounts, and create the conditions for the Government to start addressing crippling needs in social services and social infrastructure.
Dr Davies' third challenge is to create an environment that encourages production and productivity, and which stimulates established business to expand, and which attracts those wanting to create new ventures.
The fourth challenge for the finance minister is to give the working people of the country - at all levels - reason to feel that their input is being rewarded, and that there are efforts being made not only to contain the cost of living, but which also will make a meaningful contribution to improving their standard of living.
These tasks are not easy. Dr. Davies is troubled by the continuing and heavy debt burden that makes a significant demand on resources.
In addressing these matters, we suggest to Dr. Davies that he seek a fundamental solution in improving the efficiency in aspects of public administration - improving the operations of the agencies responsible for tax collection.
It is an easy, unimaginative and economically damaging policy for the Government, through Dr. Davies, to address the fiscal problems by imposing new taxes on an already overtaxed people and economy.
We also warn of the danger of Dr. Davies fiddling with or removing financial incentives that have been given to workers to encourage productivity.
We draw the minister's attention to the administrative disgrace reflected in the country's tax compliance rate of 58 per cent. This demands immediate attention, and this is where Dr. Davies should be applying his creative energies.
THE OPINIONS ON THIS PAGE, EXCEPT FOR THE ABOVE, DO NOT NECESSARILY REFLECT THE VIEWS OF THE GLEANER.
