Dr. Omar Davies (left), Minister of Finance, meeting with coffee farmers Derrick Simon (centre) and Robert Francis during a coffee farmers protest outside the office of the Ministry of Finance and Planning at National Heroes Circle yesterday. The farmers are upset over the non-payment of insurance claims they submitted in the aftermath of Hurricane Ivan in September 2004. Dr. Davies will open the Budget Debate in the House of Representatives today. - RUDOLPH BROWN/CHIEF PHOTOGRAPHER
MINISTER OF Finance and Planning, Dr. Omar Davies, will today outline how the Government plans to fund the $358 billion budget when he opens the 2006/2007 Budget Debate in Gordon House.
Two weeks ago, Dr. Davies tabled the multi-billion dollar budget, which reflected a three per cent increase over the one presented last year.
Few in the financial community are expecting any significant tax increases.
Last year the General Consumption Tax (GCT) was hiked 1.5 percentage points to 16.5 per cent, and several critical products were shifted from being zero-rated to exempt status for GCT.
Despite these aggressive measures, tax revenues in the last financial year ended March 31 were running nearly 10 per cent lower than expected up to February.
Analysts said that, with those currently in the tax net showing a marked inability to pay, Dr. Davies is more likely to focus his attention on expanding the effective reach of the tax net and try to make the system work more effectively.
This budget is the second since the start of the implementation of elements of the report of the Government-initiated Matalon Committee. Its aim is to radically prune Jamaica's tax structure to make it more just and more effective.
At the same time, a two-year wage agreement with state sector workers ended in March and the Government is now negotiating a new wage contract.
GOAL PUSHED BACK
The Government had originally planned to have a balanced budget in the last financial year but, as a result of economic difficulties, that goal was pushed back to the next financial year. For this year, when national elections are a possibility, the Government projects a modest deficit and foreign and local members of the financial community will be watching carefully to see whether the budget plans stand up to scrutiny.
The International Monetary Fund has warned that failure to press ahead with putting the country on a sound budgetary footing would undermine its economic prospects.
Apart from dealing with these issues, Dr. Davies will also be clarifying comments he made in the Standing Finance Committee last week, when he disclosed that Jamaica would be earning only US$9 million ($585 million) from hosting World Cup Cricket next year after expending US$100 million ($6.5 billion).
Schedule for the Budget Debate
APRIL 27
Opening of the Budget Debate - Dr. Omar Davies
MAY 2
Opposition Spokesman on Finance - Audley Shaw
MAY 3
Government Minister & Opposition Member
MAY 4
Leader of the Opposition - Bruce Golding
MAY 9
Prime Minister - Portia Simpson Miller
MAY 10
Closing of the Debate
- Dr. Omar Davies
