Thu | Aug 24, 2017

Jamaica be damned

Published:Sunday | March 20, 2016 | 3:00 AM

The new political administration has been sworn in and responsibilities have been apportioned. There are some obvious ministries that could generate a bit of excitement and create a little benefit for the future. The ministry that most readily comes to mind now combines Industry, Investment, Commerce with Agriculture.

The prospects are interesting and politically transformative. Just envision a revived cocoa industry with throughputs up the value chain of the cocoa bean, Jamaican sugar, dairy inputs, solar-powered plants, graphic design-inspired packaging and the animation industry creating the advertising content.

All these are to be found within our borders. All these provide sustainable jobs along the spectrum of skills: agricultural workers for the cocoa fields and dairy industry, chemists, graphic designers and workers providing the visual art content. The marketing efforts will be enhanced by the fact that Jamaica produces the world's finest cocoa beans. Combine that with an international demand.

To have a full appreciation of the potential that exists, take a look at 'Black River Chocolate'.

We can expand coffee, pimento, coconuts, turmeric, ginger and annatto. The potential for the nutraceutical industry has been well documented and it has its foundation in the farm. Honey has been largely untapped. The potential for this ministry excites the imagination.

The contrary is to be found in this amalgamation of disparate parts - more than 50 - in the Office of the Prime Minister. This has the capacity of a major nightmare. The departments proposed for this super-super ministry all have differing locations. We do not possess the information technology platform that would lend itself to accommodating seamless integration.

One is left with the feeling that the sole reason for the existence of this ministry is the need for one man to have pure, raw power. Let us not forget that the present Cabinet has one person with a month's prime ministerial experience and four years' Cabinet experience. I would have liked Bruce Golding brought in through the Senate and into the super, super-ministry.

One of the foundations of good tax policy is interrelations. Income tax, manufacturing taxes, customs and excise must be blended with consumption taxes. All of these must be with the umbrella of the tax package being progressive and to enhance social mobility.

It is difficult to understand what analysis took place that factored in the macroeconomics of the country when the politically catchy relief from income taxes for those earning J$1.5 million or less was created. If ever there was a policy that appeared, on its face, to be most beneficial, but was poorly costed out, this is it. Pathetic. However, it has worked magnificently in providing an electoral victory.

Audley Shaw has also said there will be relief for those earning between J$1.5 and $5 million. April 1, 2016, the time for implementation and the administration, is apparently willing to risk economic and social instability.

Those who earn J$5 million and over will have the burden of the so-called tax reform. Where is the equity? This did not work in the previous JLP administration of 2007-2011. The reserves earmarked to cushion oil price increase will be depleted. The already overtaxed people will be asked to pay more taxes for a political lark.

What is conveyed to the society is that the tax-paying public be damned! Let us redistribute the money solely for political purposes. No longer are we all in this economic sacrifice for the good of the nation. The intent is admirable, but the suitability of the economy to absorb it at this time clearly does not matter to the present government.

 

FEW GOODS AND SERVICES

 

When you stimulate demand with an infusion of money, the productive sector must be ready to meet the demand. The rest of our economy is not geared for this. As is, we import 42 per cent of all our needs. An increase in goods and services to meet new demand requires most everything else to be in sync. When we cannot do that, we will fuel inflation, a most cruel tax on those whom this tax rollback is designed to help. Too much money chasing too few goods and services.

The prospects for economic growth are not favourable in the short term. We import too many of the ingredients for inputs in manufacturing. Let us illustrate it with the furniture making industry. We do not have a facility to dry lumber in Jamaica. We do not have forests of mahogany, cedar, teak or mahoe, so we must import, and in doing so we import the inflation from the countries we trade with.

We add the high cost of energy, a labour force that is only 30 per cent trained, and add a high interest rate banking environment, along with a proposed 47 per cent increase in minimum wage. This is NOT a recipe for economic growth. The productivity of our labour force has been abysmal for the last 40-odd years.

The sacrifice we were making in paying a steep price to bring our debt to GDP into a better balance has all but gone through the window. By the results of the election, we are no longer willing to sacrifice for a better tomorrow. We will not be able, in the near future, to have good schools, adequate health care, effective transportation that will accommodate three working shifts in 24 hours.

Crime instills fear, but now, according to Andrew Holness, we will not die in the near future because the government has changed. We are now at the place where it is everyone for himself. The greater good be damned. Fail the IMF tests, but provide the people with up to $18,000 per month and increase the minimum wage, and joy will engulf the land. This is the new dogma.

- Ronald Mason is an attorney-at-law and Supreme Court mediator. Email feedback to columns@gleanerjm.com and nationsagenda@gmail.com.