Don’t buy JLP’s puss inna bag
The obvious realty is that a change in government will lead to more economic chaos, which we can do without at this juncture in our effort to restore and grow our economy. The current Government has made a truly gallant effort in reducing our debt-to-GDP ratio, which is way too high and like an albatross around our neck.
Without reduction in our debt, the Government cannot do the kind of infrastructure and social investments that will lead to sustain economic growth. Think of it: If in your household you are borrowing from your bank and friends to pay for your bills and feed your family, at some point, your creditors will refuse to lend you any more money because your debt would be at an unsustainable level. It would force you to file bankruptcy or default on paying your creditors - creditors would repossess your assets to recover some of their money.
Now, let's look at the raft of proposals made by the Jamaica Labour Party (JLP). First, most of these proposals are creditable, but the problem is that the economy is too fragile to support them. The proposal to have zero income tax charged on persons earning $1.5 million or less sounds fantastic for many workers. The question is, how would the JLP government make up the shortfall in revenue?
We are already unable to collect enough revenue to support the Budget, so the JLP government would need to make up the shortfall by borrowing locally or externally, increasing GCT and/or property taxes, increasing PAYE on those earning more than $1.5 million, increasing corporate taxes or placing GCT on all exempt products. Choosing any of the aforementioned options would certainly put a damper on any hope for serious economic growth, unless we are satisfied with negative or negligible growth.
REMOVAL OF SCHOOL USER FEES
The next proposal from the JLP is the removal of user fees from schools and hospitals. The question here is how these entities would make up for the shortfall in revenue. They are already inadequately funded, and with the removal of these fees, we would certainly be met with further poor conditions and lack of equipment at the institutions.
Because the government would be increasing the PAYE threshold, one is left to ponder where the revenue will come from to maintain or improve schools and hospitals. Will it be borrowed money, which certainly would attract high interest rates because of the current debt problem?
Improving towns is another point of the 10-Point Plan. We all are aware that our towns and cities are in terrible conditions and need urgent care. Like most of the 10-Point Plan, the JLP is vague on how it will fund the improvements.
I choose to highlight the above points because they are the ones that seem most intriguing to voters and eliciting most of the negative response from the PNP. While some voters see the merits in gravitating towards those promises by JLP, they should be mindful that the JLP has failed to clarify the following: 1) the price tag of these programmes; 2) the funding source for all these goodies; and 3) who will shoulder the burden of filling revenue shortfall.
Simply saying our calculations show that they can be implemented is not good enough. We cannot afford to buy puss inna bag at this juncture, when we have spent the last eight years struggling to survive under the unrelenting debt crunch and poor world economic conditions.
If we are to overcome this economic crunch, we need consistency in some of our economic programmes that will lead to reducing our debt burden to unlock investments, both locally and foreign. Let us not fool ourselves by believing foreign investments will come flowing in when the macroeconomic conditions are so unstable and the social conditions yet to show consistent improvement.
We are competing against countries in Africa, South America and Asia that have better environment for foreign investors. The JLP has failed to assure us that it will pursue those economic programmes, rather than start all over again.
We have had a history of the winning party dismantling both good and bad policies of the government swept out. If this is what we want as voters, by all means, change the current Government. However, if we want some stability, we must give the current Government a chance to complete the economic structural adjustments.
We must, however, force the prime minister to make changes to her Cabinet. She has been ignoring the calls, but she must recognise that her Cabinet has many underachieving ministers and she can ill afford to carry such baggage if given a second term.