EDITORIAL - The Opposition and the Budget

Published: Monday | April 27, 2009


It will be relatively easy for anyone with a desire to make life uncomfortable for the Government to stoke populist outrage over the big tax package announced last week by Finance Minister Audley Shaw. Or, if not openly fanning the flames, or specifically igniting a combustion, it is possible, through cynical derision and a kind of aloof passivity, to weaken the national cohesion and public will necessary if Jamaica is to pull through these tough economic times.

These, clearly, are not options open to the Opposition People's National Party (PNP) and specifically its finance spokesman, Dr Omar Davies, who speaks in the Budget debate tomorrow. This is so, notwithstanding the opportunistic opening offered by hikes in the taxes on petrol that will raise over $13 billion, or 55 per cent of the $24 billion in additional revenues - before a $6-billion give-back - that Mr Shaw has programmed for this fiscal year.

Retreat from an increase

We understand the temptation to grandstand, or at least to mock, faced by Dr Davies. A decade ago he was forced, in the face of violent demonstrations, into a retreat from an increase in the ad valorem tax on petrol, the price of which has been fashioned into a political trigger issue over three decades. It is that fixed-price tax, unchanged for 10 years, that Mr Shaw has now doubled, in addition to raising, by 150 per cent, the customs user fee on imported finished petroleum products.

The larger issue, however, is that Jamaica faces a crisis deeper than any that confronted Dr Davies during his long stint as finance minister and with an external environment far harsher than what he encountered. It is a fact that the administration, having apparently misread the severity of the oncoming crisis, dithered for too long when it ought to have been making adjustments.

But the truth be told, Dr Davies, having served for 14 years, when the Government changed 19 months ago, did not leave the Jamaican economy in good shape. The servicing of the country's debt, which is nearly 130 per cent of the gross domestic product, in the context of a long period of anaemic growth, will consume 55 per cent of projected expenditure. He was also party to the failure - a policy maintained by the current administration - to reform radically an inefficient public-sector bureaucracy, whose wages and salaries cost more than a fifth of the Budget.

In such circumstances, the Government's options are limited. And as Dr Davies was right to say a decade ago, this move by the Government to look to petrol as a broad-based source of additional revenue is rational. The fear in the past that any such move would be used as a flashpoint for violence contributed to Jamaica's failure to fashion a credible energy policy.

All of this is not to assume that there is not a basis for vigorous policy debate on the Budget. But such a debate must be rational and cogent, and not aimed at incitement. Indeed, there is room for serious discussion about reducing waste and corruption in the public sector and, critically, measures for reducing interest rates. Perhaps it is worthwhile to seek broad consensus outside the partisan fray of the legislature.

In that regard, it is not too late for Prime Minister Golding, as we suggested before, to delay or suspend the Budget debate for the parties to repair to the Vale Royal Summit in search of such a consensus.

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