In a year when the Jamaican government announced three additional tax packages since the start of the fiscal period in April, amassed a $17.9-billion deficit in the Budget and withstood lower international credit ratings by multiple agencies, one would think that the tsunami had passed.

However, the additional tax burden of nearly $50 billion, pried mainly from the pockets of middle- and lower-class citizens through the deepening and broadening of general consumption tax (GCT) on basic living items, is bound to have dire social implications on the Jamaican society.

The ineptitude and lack of vision demonstrated by the Government in the last two years have played a role in limiting Jamaica's economic options. Instead of confronting the severity of the global recession and communicating the consequential negative effects on the Jamaican economy, the administration dithered on clear indicators and acted with malaise in presenting a cogent national social and economic programme to weather the storm.

More was lost by indecision than wrong decision, and the tax millstone around the necks of Jamaicans is partly a result of the Government's lack of political will and sense of urgency in formulating policies to mitigate the repercussions of the global economic crisis.

Depressing fiscal situation

The continuing IMF agreement delay will add to investor jitters, place considerable strain on the already depressing fiscal situation and heighten the risk of capital flight. Public-sector wage freeze coupled with higher GCT means wages are on the floor while prices reach for the ceiling. Inevitably, the fiscal gap will have an impact on the social fabric and there will be stark differences between the haves and have-nots of Jamaica.

Indeed, the economic pressures will likely worsen the crime spiral and compound social inequalities. Moreover, the Government has not clearly indicated how the funds borrowed from the IMF will be used to stimulate national productivity and set the island on a path to prosperity.

Way forward

There is a critical need to be proactive instead of being woefully reactive in a dynamic global environment. A great national effort is needed and must be led by the Government in reaching a consensus on where Jamaica wants to be in the next three to five years, and charting a practical course to get there, given the current circumstances.

National debt restructuring and management, tax compliance, improved discipline in government spending, realistic budget projections and economic forecasts, greater investment in food and energy independence, as well as policies aimed at helping the Jamaican society overcome unprecedented economic hardships ought to be necessary topics in this nation-wide forum.

Battle with stagflation

As previously argued, in my letter to the editor published on December 29, 2008, 'Jamaica's impending battle with stagflation', I believe Jamaica's path to prosperity lies in increased focus and investment in health and education. The current water shortage also highlights the exigency and importance of a national conservation and environmental policy to effectively protect Jamaica's natural resources and ensure sustainability for future generations.

Failure to respond vigorously and immediately to the immense challenges facing Jamaica with vision, leadership and a national consciousness will undoubtedly set the stage for a calamitous collapse in the not-so-distant future. My fellow Jamaicans, these are serious times and the worst is yet to come.

I am, etc.,

RICHARD WELSH

rowelsh@gmail.com

Stanford, CA